KP Snacks owner Intersnack has struck a cut-price deal to buy Tyrrells and attempt to restore the brand to growth after a “phenomenal reduction in performance” under US ownership.
The Hershey Company put Tyrrells up for sale earlier this year after buying its owner Amplify Snack Brands in December 2017.
Amplify itself had bought Tyrrells from Investcorp for £300m in the summer of 2016, but the formerly fast-growing brand struggled under its ownership and was loss-making at the time of the wider Hershey deal.
The Grocer understands Hershey was in talks around a cut-price £100m sales, but City sources suggested the price had dropped further during negotiations to as low as £60m as bids reflected what one City source calls a “phenomenal reduction in performance” since the Amplify sale.
Another source commented: “Tyrrells was an exciting fast growing business that has gone backwards at the rate of knots.”
One well placed source suggested the final agreement with Intersnack was worth $140m, which would translate at £104m, but still represents a 65% loss in value of the asset over less than two years.
It is understood Pringles owner Kellogg’s ran the rule over Tyrrells in early 2018, but stepped away due to concerns over falling sales and lost business.
It is thought CapVest-owned Scandza and other private equity suitors looked at a possible deal. But one source said: “The numbers don’t stack up for private equity. It takes some believing to get back to the levels of growth it’s promising.”
The source pointed to lost branded listings at Tesco and Morrisons and a large reduction in own-label business, including lines for M&S, Lidl and Aldi. “All were profitable in their own right, and when you take that level of business out of four factories, it has an exponential deleveraging impact on the bottom line.”
One dealmaker said even a figure of £60m would still represent “a very full price” given Tyrrells’ collapse in profitability.
Amplify’s final quarterly results before it was acquired showed its international business – which almost wholly comprised of Tyrrells – recorded an operating loss of $1.4m in the 39 weeks to 30 September on revenues of US$89.9m.
Amplify had previously admitted Tyrrells was in “turnaround” mode after changing the senior management team at the business, including the departure of former boss David Milner.
Dealmakers said Intersnack was the “logical” buyer and had been in pole position through the process.
The deal expands Internsnack’s portfolio into the premium segment of the snacking market, adding to its position as the UK market’s second largest player with brands including McCoys and Hula Hoops.
Mark Thorpe, CEO of KP Snacks, said the deal will enable it to offer customers “a total savoury snacking category portfolio”.
The Tyrrells business includes a head office and two manufacturing sites in the UK, along with US manufacturing capabilities, the Aroma Snacks business in Germany and Yarra Valley Snack Foods in Australia.
The transaction remains subject to approval by the regulatory authorities.