SPC Hits Sweet Multiple on Sale to Hostess

Swander Pace Capital has closed the sale of Voortman Cookies to Hostess Brands for $320 million (C$425 million) in cash.

Voortman makes more than 60 varieties of cookies and wafers, including a line of sugar-free/no sugar added products. The company’s products are sold in supermarkets across Canada, the United States, Puerto Rico, and in 70 other countries worldwide. The company was founded in 1951 by Dutch immigrant brothers William and Harry Voortman and is headquartered southwest of Toronto in Burlington, Ontario.

Swander Pace acquired a majority stake in Voortman in October 2015, partnering with Harry Voortman and senior management to help the company build upon its market share, distribution footprint, and product offering.

In 2017, the company underwent a total brand relaunch with a new logo and packaging, all-new recipes, and updated flavors. Voortman was able to successfully connect with new consumers and disrupt the dynamics of the category by replacing artificial colors and flavors, as well as high-fructose corn syrups, with only real ingredients.

During Swander Pace’s investment in the company, Voortman expanded its share of the $8.4 billion packaged cookie industry and today remains one of the fastest-growing brands of scale in the category. According to Nielsen, Voortman has the leading market share in crème wafers and sugar-free cookies and the company has increased its revenues by 5.1% in each of the past three years.

According to Hostess, the buy of Voortman for $320 million represents a post-synergy 9.1x EBITDA valuation multiple. Voortman’s 2020 estimated adjusted EBITDA is $20 million, with an additional $15 million of annual synergies that can be realized over the next 12 to 18 months resulting in a 2020 estimated adjusted synergistic EBITDA of $35 million. If the Hostess synergies are excluded from the calculation, the EBITDA valuation multiple is a lofty 16x. Click HERE to view a copy of Hostess’s presentation to investors on the buy of Voortman.

“It has been a genuine pleasure partnering with management and the Voortman family to help the company reach its full potential,” said Tyler Matlock, a director at Swander Pace. “For nearly seven decades, Voortman has demonstrated, time and again, its ability to innovate and grow while delivering consistent quality and service to its customers. We are very appreciative of the immense support provided by Harry Voortman and his team that helped make this relationship a successful one. We believe Hostess will be an exceptional steward of the brand as Voortman continues its trajectory of growth.”

Hostess Brands is a packaged food company focused on developing, manufacturing, marketing, selling and distributing fresh baked sweet goods in the United States. The brand’s history dates to 1919 when the Hostess CupCake was introduced to the public, followed by Twinkies in 1930. Today, the company products include Donettes, Ding Dongs, Zingers, Danishes, Honey Buns and Coffee Cakes. Hostess is headquartered in Kansas City, Missouri.

The sale of Voortman Cookies follows Swander Pace’s September 2019 buy of Café Valley, a Phoenix-based maker of croissants, cakes, muffins, and other sweet baked goods. Café Valley’s products are sold to the in-store bakery, club store, mass merchandise, foodservice, and convenience store segments. According to the company, they are one of the largest independent wholesale bakeries in the United States.

Other food-related buys by Swander Pace include Bäckerhaus Veit, a Canada-based maker of frozen and par-baked bread products (November 2018); Pineridge Bakery, a Canada-based maker of frozen and fresh specialty baked goods (sold in 2014);  Ideal Snacks, a Liberty, New York-based producer of puffed and baked snacks (sold in 2015); and Nonni’s, a Chicago-based maker of cookies and other baked snacks (sold in 2012).

Swander Pace invests in middle-market consumer products companies that have revenues of up to $500 million. Sectors of interest include food and beverage, body and wellness, and home and family. The firm was founded in 1996 and has offices in San Francisco, California; Bedminster, New Jersey; and near Toronto in Burlington, Ontario.

© 2020 Private Equity Professional | January 7, 2020

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