Hearthside, a major private label food producer with clients including General Mills and Kellogg's, said it expects to close the acquisitions of both VSI and a recently-mothballed nutritional bar factory in Boise, Idaho, by September. The US company said it saw VSI’s product offerings and customer base as entirely complementary to its own.
New bars, new territories
“This is both a category and geographic expansion, putting Hearthside into the three fastest-growing bar categories as well as in the European market, where VSI is a leader,” said Hearthside founder and chairman Rich Scalise.
“The R&D and production expertise of VSI in the fast-growth categories of nutrition, diet, and functional bars enables Hearthside to take a quantum leap forward, providing our customers with the most complete offerings in the industry,” he added.
VSI, which makes speciality private label protein, sports and health bars, in contrast to Hearthside’s greater focus on snack bars, has expanded rapidly in recent years. From producing around 110 million bars in 2010 and 150 million by 2011, the opening of its third factory in 2012 boosted the company’s capacity to around 250 million bars a year.
“This is the right move for VSI at the right time. Our people, our leadership team and our customers all benefit from this acquisition. We will be able to do more things for more customers in more places,” said Gerard Janssens, CEO of VSI.
“For example, we can design, formulate, and commercialise a new bar, then produce it for customers in Europe and the Americas. This combined bar development and delivery platform sets new standards in the contract manufacturing industry,” he added.
Immediate US production
Hearthside’s acquisition of the Boise factory will allow it to produce VSI’s product lines immediately, allowing it to bring the Dutch firm’s bars to the US market far sooner than would be possible if it built a new facility.
“It takes two years from greenfield to operational bar plant. We wanted VSI capacity in the North American mix more quickly. This facility is ready to go today. The timing, the location, and the state-of-the-art equipment provides a perfect solution that makes us competitive in more bar categories immediately,” said Dwayne Hughes, senior vice-president for supply chain at Hearthside.
While none of the parties involved disclosed the terms of the deal, credit ratings agency Moody’s reported the value of Hearthside’s purchase of VSI as €108.5m. It said Hearthside would take on new debt to finance the deal, but this would not change the firm’s credit rating.
Hearthside, whose clients also include Kraft, PepsiCo, Mondelez, Starbucks, and Johnson & Johnson, operates 19 factories in the US. In June last year the firm was itself acquired by Goldman Sachs and Vestar Capital Partners, in a reported US$1.1bn deal.