The Simply Good Foods Company To Acquire Only What You Need (OWYN) For $280M In Cash

Simply Good Foods Co -0.46%

Simply Good Foods Co

SMPL

37.01

-0.46%

  • Adds a fast-growing, on trend, ready-to-drink protein shake brand to Simply Good Foods' portfolio

     
  • A scalable, growth-oriented complementary brand with a large and growing addressable market
  • OWYN is the leading plant-based, allergen-free RTD protein shake in the marketplace
  • Management will host a conference call and webcast today at 5:00 p.m. ET

DENVER and NEW YORK, April 29, 2024 (GLOBE NEWSWIRE) -- The Simply Good Foods Company (NASDAQ:SMPL) ("Simply Good Foods," or the "Company"), a developer, marketer and seller of branded nutritional foods and snacking products, and Only What You Need ("OWYN"), a leading plant-based ready-to-drink ("RTD") protein shake brand, today announced that the companies have entered into a definitive agreement under which Simply Good Foods will acquire OWYN for $280 million in cash.

Only What You Need is the fastest growing1 RTD protein shake brand in the market and enhances Simply Good Foods' portfolio with further diversification and provides the Company with a greater presence within the RTD protein shake segment. The addition of OWYN, which Simply Good Foods will acquire from existing investor United Nutritional Brands, an affiliate of Purchase Capital LLC, and other minority investors, builds on Simply Good Foods' leadership position within the nutritional snacking category.

"The acquisition of Only What You Need is strategically compelling as it brings a third, complementary brand to Simply Good Foods and further enhances our presence in the fast-growing RTD shake segment," said Geoff Tanner, President and Chief Executive Officer of Simply Good Foods. "Additionally, OWYN reaches a new, incremental consumer segment which strengthens our category leading presence with retail customers. We are confident our go-to-market capabilities will accelerate profitable growth through accelerated distribution gains, increased household penetration and leveraging our cost-efficient supply chain. We'll also look to leverage the knowledge of our collective R&D teams to continue to enhance core product performance and unlock white-space growth opportunities in other forms. Over the last few years, OWYN's net sales growth rate has been top tier within the nutritional snacking category. In 2024, we expect OWYN will achieve net sales of approximately $120 million.2 They have strong relationships with blue-chip customers in both measured and natural channels and have an impressive, profitable and growing Ecommerce business. Upon the transaction's closing, we look forward to working with Mark Oliveri, President and Chief Executive Officer of OWYN, and his leadership team. As we proceed through integration and become one Company, Mark will continue in his role and lead the OWYN team as we look to grow the brand."

"Since OWYN's launch in 2017, our goal has been to bring truth and transparency to everything we do while providing the best tasting RTD protein shakes in the market," said Mark Oliveri, President and Chief Executive Officer of OWYN. "This transaction is a continuation of our mission as Simply Good Foods is also committed to providing its consumers with quality products focused on high protein, minimal sugars and low levels of net carbohydrates. I'm extremely proud of everything the OWYN team has accomplished in establishing a $120 million2 dollar brand in such a short time," Oliveri concluded.

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1Source: Total MULO Dollar Sales for the 52 Week Period Ending March 24, 2024

2Estimated twelve months ending December 31, 2024

"We're excited that OWYN will become part of Simply Good Foods," said Nicholas J. Singer, Founder and Managing Partner of Purchase Capital. "This transaction will enable OWYN to leverage Simply Good Foods' sales, marketing and go-to-market capabilities and positions the brand to reach the next level of growth."

Compelling Strategic and Financial Benefits

Adds Attractive High Protein RTD Shake Brand with a Differentiated Position

  • A uniquely positioned brand in the fast-growing high protein RTD segment of the Nutritional Snacking category
  • Distinctive brand with a highly engaged, passionate core consumer and, increasingly, mainstream appeal
  • Great tasting, plant-based and allergen-free credentials that address a growing consumer need

     

Growth-oriented, Scalable Brand that is Complementary to Simply Good Foods

  • Enhances portfolio with further diversification and provides the Company with increased presence in the RTD shake segment
  • Targets a complementary incremental consumer to existing business
  • Similarities in go-to-market model should result in improved operating efficiencies, enhanced brand awareness and increased distribution
  • Opportunity for product enhancements and form innovation leveraging collective R&D capabilities
  • The transaction delivers on key growth criteria with significant cost synergies, driven by G&A and supply chain efficiencies

     

Financial Overview, Terms and Financing

The strategic acquisition of OWYN, which is expected to achieve net sales of approximately $120 million2 provides Simply Good Foods with additional scale and is complementary to the Company's long-term algorithm. In the short term, the Company expects the contribution of OWYN to be below the Company margins as the Company invests in the business and achieves synergies through integration. The transaction is expected to be approximately neutral to Adjusted Diluted Earnings Per Share3 in the year subsequent to closing, excluding one-time integration expenses and costs to achieve synergies.

Under the terms of the agreement, the $280 million purchase price will be paid in cash and represents a purchase price multiple of approximately 2.3x3 estimated net sales and 13.3x2 estimated Adjusted EBITDA,3 including run-rate synergies.

Simply Good Foods intends to finance the transaction by using approximately $50 million of cash on its balance sheet as well as committed financing from Barclays and Deutsche Bank. Projected trailing twelve-month Net Debt to Adjusted EBITDA3 leverage is expected to be about 1.5x, or less, at closing.

The transaction has been approved with unanimous support by the Board of Directors of Simply Good Foods and by the governing bodies of OWYN and is expected to close by the end of fiscal year 2024, subject to satisfaction of customary closing conditions and receipt of regulatory clearance.

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