Snack-Food Firms Lance, Snyder's of Hanover to Merge
Snack-Food Firms Lance, Snyder's of Hanover to Merge
Snack-Food Firms Lance, Snyder's of Hanover to Merge
Snack-food company Lance Inc. said it will combine with pretzel maker Snyder's of Hanover Inc. in a stock-for-stock merger, sending Lance shares soaring Thursday.
Financial terms of the deal weren't disclosed, but the new company, which will be called Snyder's-Lance Inc., will have about $1.6 billion in combined sales and is expected to produce at least $30 million in annual synergies.
Lance shares rose 33% to $21.30 in 4 p.m. trading Thursday on the Nasdaq Stock market, leaving the stock down 19% so far this year.
The company, which is based in Charlotte, N.C., said the deal won't materially affect its 2010 earnings but will help per-share earnings by more than 10% once completed.
Lance added that both Chief Executive David Singer and Chief Financial Officer Rick Puckett would maintain their respective positions, and each company's shareholders will own about 50% of the new company.
Janney Capital Markets analyst Mitchell Pinheiro upgraded Lance's stock to buy from neutral on what he called a "transformational merger," saying the move would help Lance expand its regional business and grow both companies' profiles.
Before the merger, the company had to depend on third-party distributors like Snyder's, a privately held company based in Hanover, Pa., to reach beyond the mid-Atlantic and southeastern regions. That cut into profits and hindered expansion, Mr. Pinheiro said.
"There's a lot of growth here," Mr. Pinheiro said. "By combining with Snyder's, Lance can move into markets where it could not get distribution."
As part of the deal, Lance will also pay its shareholders a one-time dividend of $3.75 a share.
Also Thursday, Lance reported its second-quarter profit rose to $12.3 million, or 38 cents a share, from $9.5 million, or 30 cents a share, a year earlier. Excluding severance and other expenses, per-share earnings increased to 44 cents from 30 cents.
However, revenue fell slightly to $235.4 million from $236.4 million because of higher promotional costs and a decline in sales volume.
Analysts polled by Thomson Reuters had forecast earnings of 27 cents a share on $240.7 million in sales.
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