KANSAS CITY — Hostess Brands, Inc.’s confidence in its investment in organic growth as well as its ability to create value puts the company in an “enviable spot” for merger and acquisition activity, said Andrew P. Callahan, president and chief executive officer.
“If M&A is not there at the right price and right value, we’ll take those dollars, and we’ll invest it in different ways,” Mr. Callahan said during a Sept. 9 presentation at the Barclays Global Consumer Staples Conference. “So that puts us in a very good position in the sense we don’t need to be irrational around M&A.”
Mr. Callahan said Hostess’ size can prove challenging when competing against larger companies for potential acquisition targets but is advantageous in other instances, such as the recently completed Voortman transaction.
“They (Voortman) have a defendable consumer position that we think is in a subsegment that’s going to continue to grow and is scalable over time,” he said. “That’s meaningful to us but maybe too small for some of the others. So we believe there’s a really good opportunity for us to find a sweet spot within there.
“Certainly, multiples are high, but multiples are relevant to the mathematics. If synergies can be higher or you can grow it, multiples are all relative. And we’ve demonstrated our discipline with Voortman in that regard as well, and we’re always looking at it.”
Finally, Mr. Callahan said Hostess’ ability to scale extends beyond just baked foods.
“It’s a macro snacking platform that we believe that our capabilities both on building brands, leveraging our broad-based distribution and our lean operating model enables us to look at a broader space beyond just sweet baked goods into the broader snacking universe,” he said. “So we’ll be disciplined, but there will be targets out there at the right price, at the right time.”