Lance Merges With Snyder's Of Hanover
RALEIGH, N.C. (AP) -- Sandwich cracker maker Lance Inc. and privately held pretzel maker Snyder's of Hanover said Thursday they plan to combine into a company with greater clout and distribution.
The share-for-share transaction would leave shareholders of both companies owning about 50 percent of the combined company, to be called Snyder's-Lance Inc.
"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," Snyder's Chief Executive Officer Carl Lee Jr. said. "Snyder's national distribution, national advertising and market presence will be used to support our new broader portfolio of products."
The new company will be based in Charlotte, N.C., Lance's hometown, with additional executive offices in Hanover, Pa., where Snyder's is based.
Lance shareholders would receive a $3.75 special cash dividend at the close of the merger, which is set for fall if shareholders and regulators approve it.
The snack-food makers had combined revenue of about $1.6 billion in the year that ended June 26, with operating earnings of about $170 million, the companies said. Lance said Thursday that it expects net revenue between $930 million and $950 million for 2010.
The companies said they will be able to cut their annual costs more than $30 million once they combine.
Last fall, federal regulators reportedly turned back Snyder's attempt to buy out competitor Utz Quality Foods Inc., also privately held and based in Hanover, Pa.
Lee is to be the new company's president and chief operating officer, while Snyder Chairman Michael Warehime, a member of one of the company's founding family, would be its chairman. Lance CEO David Singer will become chief executive of Snyder's-Lance.
The combined company's 16-member board is to include eight current Lance directors, seven Snyder board members and one independent director to be elected by the new board after the merger closes.
Current Lance chairman W. J. Prezzano was described as serving as "lead independent director" of Snyder's-Lance. A spokeswoman could not immediately clarify whether that means Prezzano would become the new board's ninth director with ties to Lance.
Lance, founded in 1913, is best known for crackers sandwiched around a layer of peanut butter or cheese. It also produces Cape Cod potato chips, Archway cookies and Stella D'oro Italian baked goods.
Lance announced Thursday its second-quarter net income rose to $12.2 million, or 38 cents per share, from $9.5 million last year.
Shares soared more than 28 percent to $20.49 in afternoon trading.