Simply Good Foods Co acquires Quest Nutrition, LLC

Simply Good Foods Co acquired Quest Nutrition, LLC for $1.0 billion in cash (approximately $870 million net of tax benefits), on a cash-free and debt-free basis, a transaction completed in November 2019, structured as all cash (funded with balance-sheet cash, equity-offering proceeds and incremental term-loan borrowings).

Quest Nutrition, LLC operates in Nutritional snacking - active lifestyle / Quest brand, is based in United States (El Segundo, CA), with a small international business, had revenue of about Combined estimated annual net sales of nearly $900 million (Atkins plus Quest) at close; over $800 million estimated combined at announcement. Quest Nutrition is a fast-growing active-lifestyle healthy-food company with a highly engaged consumer base. Its on-trend philosophy focuses on creating snacks that contain high protein levels with minimal sugars and net carbohydrates, across bars, shakes, confections, cookies, chips and pizza. The transaction was structured as the purchase of 100% of the equity of Voyage Holdings, LLC and VMG Quest Blocker, Inc. from Quest's founders and other equity holders.

The acquisition of Quest strengthens Simply Good Foods' position within the nutritional snacking category by expanding its portfolio of brands and product offerings while providing greater consumer and channel diversification, delivering on the strategy to become a broader nutritional snacking company. The pairing of Atkins and Quest creates a leading nutritional snacking company with combined estimated annual net sales of nearly $900 million and strong operating margins.

Fast-growing, on-trend active-lifestyle brand with a highly engaged consumer base and strong presence in convenience-store and e-commerce/specialty channels that diversified Simply Good Foods beyond Atkins; expected to track to the acquisition model on net sales and EBITDA. Increased cross-selling and marketing opportunities, enhanced go-to-market strategies, revenue growth, margin expansion and cost synergies across the combined Atkins and Quest portfolio. Operated as the Quest business within Simply Good Foods; Quest President Dave Ritterbush retained to run the brand and appointed to the Board upon closing Joseph Scalzo, Q1 FY2020 earnings call (Jan 9, 2020): "With the closing of the Quest acquisition on November 7, we fulfilled a strategic initiative of acquiring a fast growing on trend business... One of our main objectives in 2020 is the integration of Quest. This work is well underway and progressing as planned... Importantly, Quest is tracking to the acquisition model and the full calendar year 2019 net sales and EBITDA we discussed on prior conference calls."