Snyder's of Hanover Inc., a southern Pennsylvania snack food company that is one of the largest pretzel makers in the country, said Thursday it plans to combine with Lance Inc. in what the companies described as a "merger of equals."
For Snyder's, which has its headquarters in Hanover, the merger is the second attempt to join forces with another snack maker in less than a year. In October, Snyder's announced a merger with Utz Quality Foods Inc., a potato chip maker also based in Hanover, which would have created a combined company with $800 million in sales.
But Snyder's and Utz gave up their plans a month after announcing them when it appeared their merger faced a long and costly review by the Federal Trade Commission.
The deal between Snyder's and Charlotte, N.C.-based Lance would create a company with $1.6 billion in combined sales, according to the companies. Financial terms of the deal weren't disclosed.
The snack food industry is dominated by large multibillion-dollar companies, such as Kraft Foods Inc., General Mills Inc., Frito-Lay and the Hershey Co. Several smaller players, such as Snyder's and Lance, routinely merge to compete with their larger rivals and enter new markets.
"This really is a transaction that's going to create a much stronger national snack food company," said David V. Singer, president and chief executive of Lance, in a conference call with industry analysts on Thursday.
Snyder's, which is privately held, has 2,250 employees and posted sales of $652 million in 2008, the latest financial data available from the company. That same year, Lance had revenue of $852 million and profit of $17.7 million. In 2009, Lance's profit grew to $35.8 million on revenue of $918 million. Lance has 4,800 workers.
The merger would save the combined companies about $30 million a year. Details on how those cost savings would be achieved, including whether there would be any layoffs, were not disclosed.
Lance released second-quarter results on Thursday, showing it had earned $12.3 million profit on revenue of $235 million. In last year's second quarter, Lance had $9.5 million profit on revenue of $236.4 million.
Snyder's traces its history to 1909 and is known for its pretzels, but it also makes other types of snack food such as potato chips. Lance, founded in 1913, makes sandwich crackers, cookies and popcorn.
In the past two years, Lance bought the Stella D'Oro and Archway brands. Other brands that Lance owns include Cape Cod and Tom's.
News of the merger helped shares of Lance rise $5.30, or 33 percent, to close at $21.30. As part of the deal, existing Lance shareholders will receive a one-time $3.75 special cash dividend per share.
The new company would be called Snyder's-Lance, and would maintain its headquarters in Charlotte. Snyder's chairman, Michael A. Warehime, will serve as chairman of the new company. Singer will become CEO of the new company.
The merger is subject to shareholder and federal regulatory approvals, the companies said.
Snyder's of Hanover Inc.
Headquarters: Hanover, Pa.
Sales: $652 million (2008)
Products: Pretzels, kettle chips, popcorn
Headquarters: Charlotte, N.C.
Sales: $918 million (2009)
Products: Sandwich crackers, cookies and popcorn