- Simply Good Foods Company, the maker of meal kits, breads, pizzas, frozen foods, shakes, bars and other products under the Atkins brand, is buying Quest Nutrition for $1 billion, the companies said in a press release.
- The purchase would add Quest's snacks that focus on high protein — a trend popular among consumers — to its portfolio. The deal is expected to close by the end of 2019.
- Simply Good Foods said the purchase would expand its reach into the better-for-you snacking space while giving it a broader product offering for consumers and retailers. The pairing of Atkins and Quest will result in a nutritional snacking company with combined net sales of more than $800 million annually, the companies said. For its part, Quest said it will generate about $345 million in sales this year and earnings before interest, taxes, depreciation and amortization of $50 million.
The combination of Simply Good and Quest brings together two companies that are benefiting from several trends impacting the food space: healthier eating, snacking and consuming more on the go.
In a statement, Joseph Scalzo, president and CEO of Simply Good, touted a broad range of synergies that the acquisition will bring. Most notably, it will enhance the company's food offerings by adding Quest’s protein-focused bars, powders, cookies, chips and pizza to its lineup.
In addition, Simply Good said Quest has a loyal following and "favorable demographic profile" among consumers 18 to 44 years old, and has little overlap with the Atkins consumer. The transaction is expected to result in an estimated $20 million in cost synergies over three years by leveraging efficiencies of scale, the companies said.
For Simply Good, the acquisition expands its offerings, creating what Scalzo said would give "consumers a broad range of brands and products that satisfy their nutritional needs." The new company will also benefit from increased cross-selling and marketing opportunities from its portfolio of brands.
By providing shoppers with a variety of products, Simply Good is better positioned to cater to a broad range of trends that cover more consumers, while also buffering the company in case consumer preferences shift. The company also could grow revenue by cross-promoting products that fit into several trends. Simply Good could also combine its expertise with multiple trends into a single offering — for example, a low sugar, reduced carbohydrate, protein-rich bar.
Atkins has been a household name for years. In the early 2000s, many Americans followed the low-carbohydrate Atkins diet to lose extra weight — making "low-carb" a food buzzword. While the brand's popularity may have waned, it remains a prominent player in food with its well-received focus on hidden sugar and cutting back on carbohydrates — messages that resonate with consumers who are watching what they eat and how and when they consume it. If Quest's popularity starts to fade, Atkins may provide a roadmap for how to curtail the side, or stop it from happening in the first place.
M&A has become a common way for food companies to add products that resonate with consumer trends to their portfolios. In June, Mondelez International purchased a majority stake in Perfect Snacks, the manufacturer of organic, non-GMO, nut butter-based protein bars and bites. Before then, Kellogg purchased RXBAR for $600 million, Mars Wrigley grabbed a minority stake in healthy snacking company Kind, and Hormel Foods added Justin's Nut Butter to the fold.
As food companies latch on to current trends and try to position themselves as an early mover in new ones that unfold, more acquisitions of companies such as Quest are likely to follow.