Charlotte / NC. (li) Lance Inc. in North Carolina and Snyder´s of Hanover Inc. in Pennsylvania announced they have signed a definitive agreement to combine in a stock-for-stock merger of equals that will create a combined company to be called Snyder´s-Lance Incorporated. The combined company will have the operating scale and balance sheet strength to provide even more value to consumers, customers and shareholders. In addition to leading iconic brands, Snyder´s-Lance will have a national distribution footprint including one of the largest Direct Store Delivery (DSD) networks in the United States. Snyder´s-Lance will have pro forma combined net sales of approximately 1,6 billion USD, adjusted EBITDA of approximately 170 million USD, pre-synergies, and strong free cash flow for the twelve month period ended June 26, 2010. The combination is expected to generate more than 30 million USD in annualized synergies. The transaction is not expected to materially impact stand-alone Lance earnings in 2010, excluding special items, but will add incremental earnings per share of more than ten percent, on a fully synergized basis.
The transaction brings together Snyder´s, a global leader in pretzels and a U.S. leader in specialty snacks that traces its roots to 1909, with Lance, a U.S. snack food leader in sandwich crackers, potato chips, and cookies founded in 1913. «This transaction allows us to create a stronger company in a highly competitive industry and simultaneously create value for our shareholders. Snyder´s-Lance will have a broad array of leading snack food products supported by a strong national DSD system», said David V. Singer, President and Chief Executive Officer of Lance. «We are extremely pleased with the opportunity to combine two leading snack food companies in such a strategically compelling merger. Combining our strengths in salty, cracker and cookie snacks creates the opportunity to be a focused specialty company with the scale to compete in high volume categories», said Carl E. Lee, Junior, President and Chief Executive Officer of Snyder´s.
«This historic transaction combines 200 years of excellence in salty snacks and baking and will create a dynamic and competitive organization able to deliver long-term value to shareholders and a superior customer service experience, while continuing to be an important contributor to the communities in which we operate», said Michael A. Warehime, Chairman of Snyder´s. «The initiatives that we have been working on for the last few years have positioned us for this opportunity, which will create a company with nationwide distribution, a culture of customer service, and an excellent portfolio of snack food brands, products and capabilities», added Mr. Singer. «Snyder´s national distribution, national advertising and market presence will be used to support our new broader portfolio of products», added Lee.
Management Structure and Board Composition
Snyder´s-Lance will draw on an experienced and talented group of leaders from both companies. Michael A. Warehime, current Snyder´s Chairman, will serve as Chairman of the Board of the combined company, and W. J. Prezzano, current Lance Chairman, will serve as Lead Independent Director. David V. Singer, current Lance President and Chief Executive Officer, will become Chief Executive Officer of Snyder´s-Lance. Carl E. Lee, Junior, current Snyder´s President and Chief Executive Officer, will become President and Chief Operating Officer, and Rick D. Puckett, current Lance Executive Vice President and Chief Financial Officer, will become Executive Vice President and Chief Financial Officer of the combined company.
Snyder´s-Lance will have a 16 member Board drawn primarily from the existing Boards of both companies. It will be comprised of eight Directors of the current Lance Board and seven Directors of the current Snyder´s Board. An additional independent Director will be elected by the new Board immediately after closing. The company will have corporate headquarters in Charlotte (NC) and additional headquarters in Hanover (PA), where certain key leaders and functions will continue to be located.
Summary of the Transaction
Under the transaction terms, shareholders in Snyder´s and Lance will each own approximately 50 percent of the new company after the merger. Existing Lance and Snyder´s options will become options in the combined Snyder´s-Lance. Additionally, contingent on the closing of the transaction, existing Lance shareholders will receive a one-time 3,75 USD special cash dividend. The principal shareholders of Snyder´s have agreed to vote in favour of the merger. The Board of Directors for both companies has unanimously recommended the approval of the transactions to their shareholders.
The proposed merger, which is intended to be structured as a tax-free exchange of shares, is subject to approvals by the shareholders of the companies, regulatory approvals, as well as customary closing conditions. The merger is expected to close following shareholder meetings for both Lance and Snyder´s in the fall of 2010. Wells Fargo Securities acted as transaction advisor to Lance and Snyder´s. BofA Merrill Lynch rendered a Fairness Opinion to the Board of Lance.
