Bayn said the deal is ‘in line’ with its strategy to ‘actively identify, evaluate and acquire’ interesting food-tech companies.
Tweek joins Bayn’s growing portfolio of businesses that develop, sell and market sugar-reduced foods. Most recently, the Swedish ingredients manufacturer acquired FMCG brand Pändy Foods, which produces low-sugar snacks and confectionery.
A ‘perfect strategic fit’
Tweek was founded in 2016 by Åsa Rosén and Lennart Arvidsson, both of whom will continue to work at the business following the deal.
The brand has grown into the market-leader in Sweden for sugar-reduced sweets, with a total market share of about 30%. Tweek was one of the ‘pioneers’ of fibre-based sweets, where sugar is replaced with fibre instead of maltitol, which is the most common alternative for producing sugar-free sweets. Today, the products are sold widely throughout Sweden and some parts of the Nordic region.
The Tweek acquisition offers ‘significant synergy effects’ and a ‘greatly strengthened’ market position within the segment, Bayn suggested.
Both Tweek and Bayn operate within a rapidly growing niche – better for you confectionery - where Bayn historically has focused on raw materials and expanded into branded confectionery and snacks through the previous acquisition of Pändy. The combination of Bayn and Tweek's ‘complementary’ product portfolios and customer bases increases Bayn's addressable market.
The Pändy and Tweek brands have many potential synergies for increased growth through cross-selling in channels such as e-commerce and grocery shopping, the company suggested.
"The acquisition of Tweek has a perfect strategic fit for Bayn, where we now become a leading player for sugar-reduced candy products in Europe,” Simon Petrén, VP and M&A manager, Bayn Europe, said.
“With our strengthened market position and combined efforts, we will have a strong position in the functional-food part of the candy shelf and continue to lead the development forward. Both brands complement each other very well with their brand positionings and where we expand our addressable target group with the entire age range of consumers while achieving a high degree of diversification between different segments.”
Petrén explained that Pändy and Tweek will benefit from a complementary channel distribution. Tweek was built with the help of a successful pick and mix concept that was launched at Coop, to later extend the range with pre-packed candy bags, while Pändy is more active in the direct-to-consumer channel.
“Historically, Tweek has been very successful in establishing itself in the grocery trade where Pändy has instead focused on e-commerce. Together, we see many significant synergies with increased cross-channel sales in the channel segments and cost efficiency from merged systems and supply chain functions.”
The deal will also deliver R&S synergies, Petrén added. “With the addition of Tweek's development team, we have a good opportunity to accelerate our research and development of the next generation of sweetened fibres Eureba. We are pleased to welcome Tweek and the entire team to Bayn today."
Indeed, Patrik Edström, CEO Bayn Europe, said that innovation will be core to driving the brand’s future growth. “Bayn has previously sold raw materials to [Tweek] and we will immediately be able to focus on taking the technology level in their products to the next level and implementing a new generation of Eureba as the raw material base in the entire Tweek range,” he explained.
Financial upside: ‘Exciting times ahead’
Edström said the deal will also boost Bayn’s financial position. “The effects of the acquisition also contribute to Bayn's strategic goals and strengthen our financial position, where we expect to be able to reach sales of over SEK100m over the next 12 months and with positive results. We have very exciting times ahead of us,” he commented.
The purchase price will be funded through around SEK38m in new finance and SEK16.3m in new shares.
Tweek has forecast unaudited net revenues and adjusted EBIT for the first and second quarter of 2020 of SEK18.3m and SEK1.8 respectively. It has forecast net income for the next 12 months of SEK61m and EBIT of SEK 7.8m.