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11/11/2021

Hershey gets into the private label pretzel biz

Candy company bolsters salty snack business with $1.2 billion acquisition.
Dan Ochwat
Executive Editor
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Leading chocolate brand The Hershey Co. has entered into a definitive agreement to acquire a private label pretzel company.

As part of its deal to acquire Dots Pretzels, the maker of Dot’s Homestyle Pretzels, Hershey acquired Pretzels Inc., an affiliate of Peak Rock Capital, a private investment firm with a number of investments in the food and beverage industry. Pretzels Inc. is a co-manufacturer of pretzels for Dot's Pretzels and several other customers.

The total purchase price for the two proposed acquisitions is approximately $1.2 billion, or approximately $1 billion of investment net of expected future tax benefits. It will be financed with cash on hand as well as short-term borrowings.

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The estimated aggregate net sales for the two businesses were approximately $275 million for the 12 months ended September 2021. The combination of the two strategic acquisitions is expected to be slightly accretive to reported earnings per share in 2023 and adjusted earnings per share in 2022. The acquisitions are subject to customary regulatory approvals and are expected to close by the end of 2021.

Pretzels Inc., based in Bluffton, Ind. recently introduced an innovation of almond butter-filled pretzels. The company operates three manufacturing locations in Indiana and Kansas. When the transactions are completed, the three locations would be in addition to four pretzel-seasoning facilities to be acquired with Dot's. The acquisition gives Hershey deep pretzel category and product expertise and the manufacturing capabilities to support Dot's growth and future pretzel innovation as well as the continued growth through Pretzels Inc.'s leading co-manufacturing capabilities, according to Hershey.

"Pretzels Inc. will help us expand Hershey's snacking and production capabilities while keeping the special connection to Dot's," said Michele Buck, president, CEO, The Hershey Co., Hershey, Pa. "It will be important as we continue to grow this already fast-growing brand and create new products in the broader pretzel category."

The Dot’s Pretzels acquisition adds to the candy company’s growing salty snacks business.

“As the fastest growing U.S. pretzel brand, Dot's Pretzels would further accelerate our success in the permissible salty snack category, along with our successful SkinnyPop and Pirate's Booty brands," said Buck. "With a unique range of bold, distinctive seasonings and a flavorful crunch that creates a premium pretzel experience for consumers, Dot's Pretzels stand apart from all other products in the pretzel category and represents 55% of the pretzel category's growth during the past year."

Created more than a decade ago in North Dakota by founder Dot Henke in her home kitchen, Dot's Pretzels started as a special family snack that she shared with family, friends and neighbors to get through long, cold North Dakota winters. Dot built her business by holding to the highest quality standards, a tradition the company proudly continues today so that each bag of Dot's Pretzels tastes as if it were made in Dot's home kitchen using her original secret formula. 

"I created my pretzels to share with those people closest to me and have built the business with the idea of sharing them with everyone," said Henke. "With Hershey behind this amazing brand, I am confident that anyone who would like to enjoy these deliciously bold pretzels will have the opportunity."