Hershey Co (NYSE:HSY) shares were slightly down premarket but later recovered after announcing a US$921mln deal to buy Amplify Snack Brands Inc’s (NYSE:BETR) Skinny Pop popcorn maker.
Under the deal, Hershey will cough up US$12.00 in cash for each Amplify share outstanding, which is 71.4% premium over its Friday's closing price of US$7.00.
Purchase to be funded via cash and new debt
Including debt, the deal is valued at US$1.6bn, the company said in a statement on Monday.
The maker of Reese's Peanut Butter Cups and Hershey's Kisses, said it would fund the deal with cash in hand and new debt.
The acquisition is not expected to affect Hershey's current credit ratings.
Hershey expects the deal to add to adjusted earnings per share in the first year after closing, target in the first quarter of 2018.
Bolster healthy snacks unit
"Hershey is a great cultural partner for Amplify and I'm excited for our team who will have access to Hershey's marketing and go-to-market resources to take our brands to the next level," said Amplify Chief Executive Tom Ennis.
The acquisition is seen as a move to bolster Hershey's healthy snacks division.
Amplify's SkinnyPop popcorn do not have artificial ingredients and transfats
In premarket, Amplify Snack Brands shares surged 70.86% at US$11.96 while Hershey was slightly down at 0.04% at US$114.10.
Later in the session, Amlify was up over 70% at US$11.94, while Hershey added 0.51% at US$114.74.