Hostess Buying Voortman for $320M

Hostess Brands is purchasing Voortman Cookies Limited for $320 million from a San Francisco-based private-equity firm, boosting its exposure to the cookie category.

“Voortman is a leading brand with a well-defined consumer position that complements and extends the growing Hostess portfolio into the growing cookie and better-for-you sweet snacking categories with meaningful runway for future growth,” said Andy Callahan, Hostess’ president and chief executive officer, in a press release. 

Voortman, founded in 1951 in Ontario, Canada, is known for its several variety of wafers and cookies, from which trans fats were removed by the company in 2004. Private-equity firm Swander Pace Capital acquired a majority stake in the company in 2015, for an undisclosed amount. 

Hostess’s acquisition, for which it is using cash and loans from Credit Suisse and Citi to fund, is set to close during the first quarter of 2020. While boosting its presence in the cookie segment, Hostess management says the deal will bring “at least $15 million in annual run-rate cost synergies within 12 – 18 months.” The purchase is also expected to add $20 million in adjusted EBITDA next year, increasing to between $40 million and $50 million by 2022.

During Hostess’ third quarter, which ended Sept. 30, revenue increased 7.7 percent, to $227.2 million, while net income rose 32.9 percent, to $19.2 million, which management attributes to strength in the breakfast category and operating efficiencies.

Hostess Brands is in the process of moving its headquarters from Kansas City, Mo., to Lenexa, and the company is opening its main distribution center in Edgerton, Kan., some time next year.