An ‘iconic, differentiated brand’
J&J President and CEO Dan Fachner described Dippin’ Dots as an ‘iconic’ and ‘differentiated’ brand. “Dippin’ Dots aligns perfectly with J&J’s portfolio strategy by adding an iconic, differentiated brand that uniquely complements our frozen novelty and frozen beverage businesses,” Fachner said.
The executive revealed that he anticipates Dippin’ Dots will benefit from sales synergies within the J&J business. “With this acquisition, we can further leverage our combined strength in entertainment and amusement locations, theaters, convenience, and supermarkets to realize added scale, operational and go-to-market synergies and create new selling opportunities among an expanded customer base. We are confident this transaction further positions us for accelerated growth across our business.”
Fachner further added that the move builds on J&J’s track-record of profitable M&A. “J&J Snack Foods has completed over 30 value-building transactions throughout the Company’s history, and we have a proven, long-term track record of successfully integrating and scaling niche brands including ICEE, SuperPretzel, Luigis and others. As a part of J&J, we will have the opportunity to leverage our marketing and innovation capabilities to promote Dippin’ Dots and expand distribution into new markets while implementing initiatives to gain added operating efficiencies.”
Earnings positive M&A
The deal, for US$222m, will be funded through a combination of cash and debt. It is expected to be earnings accretive and should close by the end of June, the company revealed.
“Dippin’ Dots presents an opportunity to acquire a company that aligns with our focus on accelerating growth while delivering incremental shareholder value. Financially, we are leveraging our strong balance sheet and healthy liquidity position to acquire a profitable and scalable business that complements our long-term growth strategy,” J&J CFO Ken Plunk revealed.
“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. This acquisition also provides significant tax benefits contributing to an even more attractive overall valuation.”
Patented cryogenic freezing for ‘beaded’ ice cream
Dippin’ Dots uses a patented cryogenic freezing process to create unique ‘beaded’ ice cream, yogurt, sherbet, and flavored ice products.
The company sells its products through national accounts, local accounts, and a franchise network with over 140 franchisees. Dippin’ Dots is headquartered in Paducah, KY, along with its main production facility, warehousing, distribution, and administrative offices. The company also leases four additional frozen warehouses strategically located in California, Canada, Australia, and China. The company has a presence in seven countries worldwide.
Scott Fischer, CEO of Dippin’ Dots, said he thinks J&J will offer the brand a good home. “The Dippin’ Dots team is thrilled to be joining the J&J Snack Foods family. As a leader in the snack industry with a number of iconic brands and a strong record of product innovation, we believe J&J Snacks Foods is well-positioned to leverage our unique offering in the market and improve and grow the business going forward.”