Tyrrells is likely to return to private equity hands in a cut-price deal as new owner Hershey’s looks to sell off the upmarket crisps brand.
Weekend reports suggested confectionery giant Hershey’s, which inherited Tyrrells after buying its US owner Amplify Snack Brands in December, is poised to start an auction for the brand after just 18 months in US hands.
Amplify bought Tyrrells from Bahrain-based Investcorp for £300m in the summer of 2016, but the brand has suffered in its home UK market ever since and Hershey’s is set to cut its losses on the deal.
The Grocer understands Pringles owner Kellogg’s has run the sliderule over Tyrrells in recent months. However, the cereal giant appears to have walked away from a firm bid, opening up the auction to an array of participants.
One City source tipped Tyrrells to end up in private equity hands for the third time rather than a sale to another trade buyer. “The most likely scenario is PE picks it up on the cheap and tries to sort it out to sell it on again,” the source predicted. The Grocer understands one PE player that has expressed an interest is Karro Food Group and Valeo owner CapVest.
A source said Tyrrells still had considerable brand cachet in the UK and bidders would be attracted by its manufacturing sites in Germany and Australia.
However, the source added that the downturn in Tyrrells’ financial fortunes under Amplify meant suitors would push for a bargain price.
It is believed Hershey’s is looking for about $200m (£141m) – around half the £300m Amplify paid for Tyrrells in 2016.
Insiders suggested the final price may even be closer to the £100m Investcorp paid to take Tyrrells from Langholm Capital back in 2013.
Amplify admitted in August last year that Tyrrells was in turnaround mode after underperformance in its domestic market hit sales and profits at the brand. The then-owner cut SKUs and axed private-label contracts as well as shaking up its management team, including the departure of former Tyrrells CEO David Milner.
The Grocer revealed in October that Tyrrells had fallen victim to a bagged snacks overhaul at Tesco, which has seen 17 of the brand’s 23 crisps and popcorn SKUs vanish from the supermarket’s shelves.
UK accounts showed operating profits fell 45% at Tyrrells in the 39 weeks to 31 December 2016, while Amplify announced its international division, primarily the Tyrrells business, posted an operating loss of $1.7m (£1.3m) in the first half of 2017.
In November 2017, Amplify said its international division was “showing sequential improvements throughout the year”, while Josh Gittler, then senior director of corporate finance at Amplify, told The Grocer in October that “the turnaround is progressing very nicely and we’re seeing improving sales and margins.” Tyrrells declined to comment for this story.
Founded in 2002 by potato farmer William Chase, Tyrrells was bought by Langholm Capital in April 2008 for £40m, before the 2013 sale to Investcorp and subsequent Amplify deal in 2016.
Hershey’s acquired Amplify Snack Brands for $1.6bn in December 2017.
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