US – J&J Snack Foods, a US snack manufacturer, has signed an agreement to acquire beaded ice cream producer Dippin’ Dots for US$222 million in an effort to expand its product portfolio and leverage its strength in the market.
An ice cream industry pioneer, Dippin’ Dots uses an innovative and patented cryogenic freezing process to create unique “beaded” ice cream, yogurt, sherbet, and flavored ice products enjoyed by millions of consumers.
The company sells its products through national accounts, local accounts, and a franchise network with over 140 franchisees.
Headquartered in Paducah, Kentucky, the company leases four frozen warehouses located in California, Canada, Australia and China.
Following the acquisition J&J plans to leverage its marketing and innovation capabilities to promote Dippin’ Dots and expand distribution into new markets while implementing initiatives to gain added operating efficiencies.
J&J Snack Foods president and CEO Dan Fachner said: “With this acquisition, we can further leverage our combined strength in entertainment and amusement locations, theatres, convenience, and supermarkets.
The move is to realize added scale, operational and go-to-market synergies and create new selling opportunities among an expanded customer base”.
In recent years, Dippin’ Dots has expanded beyond ice cream to bring its technology to plant-based meat manufacturers, pharmaceutical companies, probiotic brands, and animal feed, among other industries, that require high-volume cryogenic freezing.
This expansion in broad products pivoted it to generate US$300 million in gross retail sales in 2019 and had anticipated a good year in sales in the following years.
Ken Plunk, J&J Snack Foods Chief Financial Officer revealed that the company is leveraging its strong balance sheet and healthy liquidity position to acquire the Kentucky-based business.
“We expect this transaction to be accretive to our Earnings per Diluted Share in the range of $0.30 to $0.40 per share in the first 12 months after closing,” added Plunk.
The acquisition also provides significant tax benefits to J&J Snacks foods, contributing to an even more attractive overall valuation.
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