CHARLOTTE, NC -- Lance Inc., the maker of Cape Cod potato chips and Stella D'oro cookies, agreed to merge with pretzel maker Snyder's of Hanover Inc. (Hanover, PA) to improve distribution of the companies' snacks. The deal will close later this year pending shareholder and regulatory approval, the companies said.
Lance shareholders will receive a one-time $3.75 special cash dividend. Snyder's and Lance will each own approximately 50% of the new company, called Snyder's-Lance Inc. The principal shareholders of Snyder's have reportedly agreed to vote in favor of the merger.
The combined company's well-established portfolio of snack food brands will consist of pretzels, sandwich crackers, potato chips, cookies, tortilla chips and nuts.
Officials said the merger will position Snyder's-Lance with a national distribution footprint, including one of the largest direct store delivery networks in the U.S. The new company will compete against PepsiCo Inc.'s Frito-Lay in the salty snacks business.
Both companies have pursued acquisitions in the past year to win more bargaining power with national retailers like Kroger Co. and Wal-Mart Stores Inc. Snyder's plan to acquire Utz Quality Foods fell through last November, when Utz backed out. See story.
Snyder's-Lance will reportedly have combined pro forma net sales of approximately $1.6 billion. The merger is expected to generate more than $30 million of annual savings in purchasing, production and distribution. The company will be headquartered in Charlotte, NC, and maintain offices in Hanover, PA
Michael A. Warehime, Snyder's chairman, will serve as chairman of the board of the combined company, and W. J. Prezzano, Lance's chairman, will serve as lead independent director. David V. Singer, Lance president and chief executive, will become chief executive of Snyder's-Lance. Carl E. Lee, Jr., Snyder's president and chief executive, will become president and chief operating officer, and Rick D. Puckett, 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. The new board will elect an additional independent director immediately after closing.
Lance, based in Charlotte, had sales of $918.2 million in 2009. Last October, the company bought cookie and breadstick maker Stella D'oro Biscuit Co. from private-equity firm Brynwood Partners LP for an undisclosed cash sum.
The company, founded in 1913 by Phillip L. Lance and his family, sold the first packaged peanut butter sandwich cracker. Today it sells crackers, cookies, and chips under the Cape Cod, Archway, Tom's, and Lance brand names.
Family-owned Snyder's manufactures a wide range of pretzels that are a staple in vending machines nationwide. It also owns the Jays Potato Chips and O-Ke-Doke popcorn brands. The chip maker employs 2,250 associates and operates 1,800 distribution routes nationwide, with annual revenues of $750 million. Snyder's first began selling pretzels in 1909 as part of the Hanover Canning Co., its parent company until 1980.