- Snyder's-Lance has seen stronger growth than many other packaged foods companies and could be an attractive acquisition target for larger companies, but the market and timing may not be right for companies that would most likely be interested, according to a report on the company from Mario Contreras, a research associate with Deutsche Bank, New York.
- Potential buyers could include Mondelez, PepsiCo, and Kellogg, but Mondelez is more interested in international targets, PepsiCo would face significant regulatory hurdles, and Kellogg seems to be more interested in its cereal business and Project K.
- While Snyder's-Lance's management aims for double-digit margins, Deutsche Bank expects an 8.7% operating margin for the company in 2016. Contreras recommends the company eliminate residual costs from the private brands segment divested in 2014 and make core brands a larger part of the company's overall portfolio, as opposed to brands like Late July, a 2014 acquisition, which is less profitable.
At the same time, while they may be less profitable than core brands, better-for-you brands are strong drivers of top-line growth for Snyder's-Lance, as they account for about one-third of the company's sales. However, Contreras fears that some of these brands may be hitting a ceiling in terms of potential for geographical distribution.
Contreras also commended the core Lance brand, particularly its brand renovation and the introduction of QuickStarts breakfast products, which he said "appear to be having a positive effect."