Hershey to buy two pretzel makers for $1.2 billion

(Reuters) -Hershey Co has agreed to buy two pretzel makers in separate deals worth about $1.2 billion to beef up its snacking business, the U.S. chocolatier said on Wednesday.

The combined net sales at the two businesses – Dot’s Pretzels Llc, the owner of Dot’s Homestyle Pretzels, and Pretzels Inc – were about $275 million for the 12 months ended September, Hershey said in a statement.

Dot’s accounted for 55% of the pretzel category’s growth in the United States during the past year, it added.

Packaged food makers have been spending billions of dollars to boost their snacking portfolios and keep sales growth levels high, after the COVID-19 pandemic helped them book outsized gains last year from people mainly staying at home.

“(Savory and better-for-you snacks are) two areas where we are underdeveloped, and we have an opportunity to capture incremental snacking occasions,” Hershey Chief Executive Officer Michele Buck said at a conference earlier this year.

Hershey has also been doubling down on the snacking category in recent years, buying SkinnyPop popcorn maker Amplify Snack Brands in a $1.6 billion deal in 2018 and making a recent entry into the nutrition bar category.

Dot’s Pretzels was created more than a decade ago in North Dakota by founder Dot Henke in her home kitchen, while private investment firm Peak Rock Capital owns the four-decade old Pretzels Inc.

Hershey said it would also add three manufacturing locations and four pretzel-seasoning facilities when the deals close, expected by the end of this year.

Rival Mondelez International Inc in May said it would buy Greece-based snacks maker Chipita S.A., which houses croissant and baked snack brands, including 7Days, Chipicao and Fineti, for about $2 billion.

Hershey, which already makes Reese’s Peanut Butter cups and SkinnyPop Popcorn, said the latest deals would add to its adjusted earnings next year.

(Reporting by Praveen Paramasivam in Bengaluru; Editing by Shailesh Kuber)