DENVER and NEW YORK - The Simply Good Foods Company (NASDAQ:SMPL), a prominent player in the nutritional snacking market, has announced a definitive agreement to acquire Only What You Need (OWYN), a leading plant-based ready-to-drink protein shake brand, for $280 million in cash. This strategic move is set to enhance Simply Good Foods' product portfolio and expand its presence in the burgeoning ready-to-drink shake segment.
OWYN, known for its plant-based, allergen-free shakes, has been identified as the fastest-growing brand within its category. The acquisition from United Nutritional Brands and other minority investors aligns with Simply Good Foods' strategy to diversify its offerings and tap into new consumer segments. Geoff Tanner, President and CEO of Simply Good Foods, highlighted the complementary nature of the OWYN brand to their existing portfolio and the potential for accelerated growth through increased distribution and household penetration.
Mark Oliveri, President and CEO of OWYN, expressed pride in the brand's rapid establishment in the market, boasting net sales projections of approximately $120 million for the year. He emphasized OWYN's commitment to transparency and quality, aligning with Simply Good Foods' values.
The transaction is expected to close by the end of the fiscal year 2024, subject to customary closing conditions and regulatory approval. Simply Good Foods plans to finance the purchase through a combination of cash on hand and committed financing from Barclays and Deutsche Bank, with the post-acquisition leverage expected to be manageable.
This acquisition is anticipated to be neutral to Simply Good Foods' Adjusted Diluted Earnings Per Share in the year following the closing, excluding one-time integration expenses. The company also expects to realize significant cost synergies, particularly in general and administrative expenses and supply chain efficiencies.
The Simply Good Foods Company, headquartered in Denver, Colorado, is known for its trusted brands and innovative products in the nutritious snacking space, including protein bars, shakes, and other snacking products under the Atkins and Quest brands. OWYN, since its launch in 2017, has focused on providing great-tasting, plant-based protein shakes with a commitment to ingredient transparency.
InvestingPro Insights
As The Simply Good Foods Company (NASDAQ:SMPL) gears up to integrate OWYN into its product lineup, current market data from InvestingPro provides a snapshot of the company's financial health. With a market capitalization of $3.42 billion, Simply Good Foods is trading at a P/E ratio of 24.38, which suggests a premium valuation relative to its near-term earnings growth. This is underscored by an adjusted P/E ratio for the last twelve months as of Q2 2024 at 23.99 and a PEG ratio for the same period at 3.04, indicating expectations of future earnings growth relative to the company's share price.
On the balance sheet side, Simply Good Foods' liquid assets surpass its short-term obligations, reflecting a solid liquidity position that could support the company's expansion efforts, including the OWYN acquisition. Moreover, the company operates with a moderate level of debt, which could provide flexibility in financing the deal without overleveraging.
InvestingPro Tips reveal that while 10 analysts have revised their earnings downwards for the upcoming period, the company is expected to remain profitable this year, continuing its positive performance over the last twelve months. However, it's important to note that Simply Good Foods does not pay a dividend, signaling that it may be reinvesting earnings back into the company for growth.
For readers interested in a deeper dive into Simply Good Foods’ financials and future prospects, InvestingPro offers additional insights. With the use of coupon code PRONEWS24, users can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to a wealth of financial data and analysis to inform investment decisions. There are currently several more InvestingPro Tips available for SMPL, which can be found at: https://www.investing.com/pro/SMPL
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