US snack makers Lance and Snyder’s of Hanover said they will focus on core brands for growth while also pursuing acquisition opportunities once the merger of the two companies is complete.
The deal, announced by Lance today (22 July), will combine the two firms in a stock-for-stock merger of equals that will create a company to be called Snyder’s-Lance.
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In addition to brands including Lance, Snyder’s of Hanover, Cape Cod and Grande, Snyder’s-Lance will have a national distribution footprint including, Lance claimed, will be one of the largest Direct Store Delivery (DSD) networks in the US.
Yet it will be Lance’s crackers and Snyder’s pretzel brands that the new company will focus on for growth.
“The two anchors will be Lance crackers, which has a very strong growth platform and pretzels. These will be the two key franchises that we will support aggressively for top-line growth,” David Singer, president and CEO for Lance told analysts.
Speaking at a conference call following the merger announcement and Lance’s second quarter results, Singer added that it will also consider further purchases.
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By GlobalData“We will work on making sure we integrate these companies and move forward to drive our primary objective to deliver growth,” Singer said. “Once the deal is structured we will have a solid financial profile and an experienced management team with an energised growth platform. We will then opportunistically pursue acquisitions to further leverage the national distribution network.”
Snyder’s current chairman will be appointed chairman of the new firm, Lance chairman WJ Prezzano will become lead independent director and Lance CEO David Singer will take the role of CEO.
In addition, Snyder’s CEO Carl Lee will take the role of president and COO, and Lance’s EVP and CFO will be appointed executive vice president and CFO.
Singer said the team will now concentrate on “value creation and profit growth”.
“We are going to be very well positioned for profitable growth and we will be able to leverage to markets where one side maybe isn’t as strong as another, expand our products into new channels and markets, improve scale and better support our retail customers. We will have more resources to invest in brands and product innovation,” Singer said.
However, Singer added that the firm will also have to take into consideration the risks of merging two companies.
“They include issues associated with putting all synergies together, integrating companies, and there will be employees are worried about what will happen,” Singer said.
“We will need to make sure they know what is happening, but again we are focused on growth not shrinking so there will be a lot of opportunities for people.
“I think this is going to work out great, but clearly there are risks and it’s about integration but beyond that I’m really comfortable with it,” he added.
The merger is expected to complete in the autumn of 2010.
