Chaucer Foods has acquired a majority stake in Crunchies Food Co., the US snacks firm that filed for Chapter 11 after claiming the UK-based food ingredients group had tried to launch a hostile bid for the business.
In a deal announced yesterday (28 October), Chaucer, a supplier to Crunchies, said it had acquired 65% of the freeze dried snacks manufacturer. Citing Nielsen data, Chaucer said Crunchies was the “leading brand in freeze dried snacking in the US”.
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However, two months ago, Crunchies filed for Chapter 11, alleging “hostile and aggressive actions” from “a small group of investor-creditors”.
According to US press reports in August, in court filings, Crunchies said it had been unable to meet a payment schedule set out by Chaucer to settle a debt of around US$1m.
The Pacific Coast Business Times said Crunchies had claimed Chaucer had “used the settlement discussions to feign interest in making an equity investment” in the business. Chaucer, the filing continued, then moved to “pounce upon” Crunchies “with an orchestrated hostile takeover in the form of a proposed assignment for the benefit of creditors that would wipe out most unsecured creditors and equity”.
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At the time, Jim Lacey, Crunchies’ president and CEO, said the company filed for Chapter 11 because it had had “no choice but to move with equal aggression to protect the eight years we have spent working diligently”.
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By GlobalDataSpeaking to just-food today, Chaucer sales and marketing director Richard Ilsley said there had been “miscommunication” between the two companies.
“There was a situation whereby Chaucer had an outstanding debt within Crunchies that we tried to convert into equity but that’s old news,” he insisted. “The new news is we have obviously reached a deal with Crunchies and their shareholders and we’ve now secured, with the support with Crunchies, the investment in their business. There was some miscommunication and discussions earlier on but as you can see everything is now resolved and we have a positive relationship going forward – with the existing CEO and president Jim Lacey retained in the business, which is to all of our benefit.”
The Pacific Coast Business Times said Chaucer, in filings to respond to the Chapter 11 application, had said it had put forward a proposal that would see the sale of Crunchies’ assets to raise proceeds to pay the creditors. The company had said it was in talks with other creditors to get the agreement in place.
Speaking to just-food, Isley said: “I really don’t want to dwell on that. That’s not the point of the announcement. The announcement is very much about the fact we’ve reached a positive relationship with Crunchies. Everyone is on board and now we are focusing on building the business and moving forward in the consumer marketplace.”
Crunchies, which supplies freeze dried ingredients to the likes of Heinz, Kellogg and Unilever, said the deal, struck for an undisclosed sum, was “reflective of Chaucer’s increasing momentum in the rapidly-growing US freeze dried market and the expansion of its freeze dried offering direct to consumers”.
Ilsley said the prospects for healthy snacks was behind the company’s move to expand its interests in consumer products.
“Chaucer can see the growth potential in the healthy snacking market place and believes that freeze dried snacking has a role to play in the sector. By acquiring the Crunchies brand we have the benefit of their excellent consumer skills which we can marry with our freeze dried manufacturing expertise,” Isley said.
In its announcement on the Chaucer deal, Crunchies also revealed existing shareholder Simplepitch Ventures had made an investment in the business. The venture capital firm owns the other 35% of Crunchies.
In a statement on both deals, Lacey said: “Chaucer, as a global leader in its field, and Simplepitch Ventures have the resources to enable us to deliver the highest quality products to our loyal retail customers and consumers, along with the capacity to meet the growing needs of our valued distribution partners.”
Lacey could not be reached for further comment on the transactions.
At present, Crunchies has listings in retailers including Wal-Mart, Sprouts Farmers Markets and Kroger’s Ralph.
Chaucer has a consumer-facing snacks business in the UK called The Premium Snack Co., which sells brands called Nothing But and Fruit Snax in Whole Foods and in health food stores.
Asked if Chaucer could use the Crunchies investment to launch the two UK brands in the US, Ilsley said: “Crunchies is a brand that is well-known in the US. The idea of bringing new brands into the US is extremely challenging and when we have a brand that is already market-leading in the US, as Crunchies is, it makes sense to focus all our efforts in the US on developing the Crunchies brand.”
Ilsley said the deal would raise Chaucer’s profile in the US, which could boost its food ingredients business.
“Chaucer announced back in March that we opened a US manufacturing facility and having an investment in the Crunchies brand will raise our presence and this is good for our standard freeze-dried business,” he said.
