Back to top
Read MoreHide Full Article

Snacks company Snyder's-Lance, Inc. (LNCE - Free Report) recently completed the previously announced divestiture of its Private Brands business in a bid to focus more on “better for you” snacks.

Private Brands, along with two manufacturing facilities in the U.S. and Canada, were sold to Massillon, OH-based private snacks maker Shearer's Foods for $430 million ($300 million after tax).

The Private Brands spin-off was announced on May 7, the same day Snyder's-Lance announced the acquisition of Baptista's Bakery, Inc — a maker of “better for you” and other baked snacks. The Baptista's Bakery acquisition was completed in mid-June.

The Private Brands spin-off and Baptista's Bakery acquisition are part of Snyder's-Lance’s strategic plan to diversify into healthy snacks business in keeping with the latest consumer fad for low calorie and healthier snacks.

The two deals together are expected to lower Snyder's-Lance’s annual revenues by $250 million and result in an initial operating margin decline of 20 basis points due to stranded costs after the sale of Private Brands. In order to offset these headwinds, the company announced a “Margin Improvement & Restructuring Plan”. The strategy, which includes operational initiatives and workforce reductions, is expected to reduce costs by $22 to $25 million annually. The cost savings will be realized over the next 12 months starting the third quarter of 2014.

Snyder's-Lance is engaged in manufacturing, marketing and distribution of a variety of branded and private-label snack foods and bakery products. Its products include sandwich crackers, pretzel crackers, potato chips, cookies, tortilla chips, restaurant style crackers, nuts and other snacks.

The Zacks Rank #5 (Strong Sell) company is scheduled to report second-quarter 2014 results in early August.

Other Stocks to Consider

Better-ranked food stocks include Mondelez International, Inc. (MDLZ - Free Report) , Hain Celestial Group Inc. (HAIN - Free Report) and Inventure Foods, Inc. (SNAK - Free Report) . All these stocks have a Zacks Rank #2 (Buy).

More from Zacks Analyst Blog

You May Like