Dot’s Pretzels are a perfect complement to Hershey’s growing salty snacking portfolio and would create an opportunity to reach new consumers in new occasions, advancing Hershey’s snacking powerhouse vision.
“As the fastest growing U.S. pretzel brand, Dot’s Pretzels would further accelerate our success in the permissible salty snack category, along with our successful SkinnyPop and Pirate’s Booty brands,” said Hershey Co. President and CEO Michele Buck. “With a unique range of bold, distinctive seasonings and a flavorful crunch that creates a premium pretzel experience for consumers, Dot’s Pretzels stand apart from all other products in the pretzel category and represents 55 percent of the pretzel category’s growth during the past year.”
Created more than a decade ago in North Dakota by founder Dot Henke in her home kitchen, Dot’s Pretzels started as a special family snack that she shared with family, friends and neighbors to get through long, cold North Dakota winters.
Dot built her business by holding to the highest quality standards, a tradition the company proudly continues today so that each bag of Dot’s Pretzels tastes as if it were made in Dot’s home kitchen using her original secret formula.
“I created my pretzels to share with those people closest to me and have built the business with the idea of sharing them with everyone,” said Dot. “With Hershey behind this amazing brand, I am confident that anyone who would like to enjoy these deliciously bold pretzels will have the opportunity.”
Expanded Manufacturing and Innovation
Hershey also announced it has entered into a definitive agreement to acquire Pretzels Inc., a co-manufacturer of pretzels for Dot’s Pretzels and several other customers, and a leading innovator in the pretzel category. Based in Bluffton, Ind., Pretzels Inc. operates three manufacturing locations in Indiana and Kansas.
When the transactions are completed, the three manufacturing locations would be in addition to four pretzel-seasoning facilities to be acquired with Dot’s. The acquisition of Pretzels Inc. would give Hershey deep pretzel category and product expertise and the manufacturing capabilities to support Dot’s growth and future pretzel innovation as well as the continued growth in the entire pretzel category through Pretzels Inc.’s leading co-manufacturing capabilities.
“Pretzels Inc. will help us expand Hershey’s snacking and production capabilities while keeping the special connection to Dot’s,” explained Buck. “It will be important as we continue to grow this already fast-growing brand and create new products in the broader pretzel category.”
The total purchase price for these two proposed acquisitions is approximately $1.2 billion, or approximately $1 billion of investment net of expected future tax benefits. The deal will be financed with cash on hand as well as short-term borrowings. The estimated aggregate net sales for the two businesses were approximately $275 million for the 12 months ended September 2021.
The combination of these two strategic acquisitions is expected to be slightly accretive to reported earnings per share in 2023 and adjusted earnings per share in 2022. The acquisitions are subject to customary regulatory approvals and are expected to close by the end of 2021.