Minnesota's Farley's & Sathers plans to merge with Lemonheads maker Ferrara Pan .
Minnesota-based Farley's & Sathers Candy Co. said Wednesday that it plans to merge with a suburban Chicago firm in a deal that would unite two of the nation's largest non-chocolate candy makers into a company with about $1 billion in annual sales.
Farley's & Sathers is best known for making private-label candy for big retailers like Wal-Mart, candy industry analysts say. But it also owns such classic brands as Brach's, Now and Later, Jujyfruits and Chuckles.
The proposed deal is with Ferrara Pan Candy Co., a century-old company that makes Lemonheads, Atomic Fireballs, Red Hots and Boston Baked Beans. The combined firm will be called Ferrara Candy Co. Inc., and will be led by Ferrara Pan Chief Executive Salvatore Ferrara II.
The new Ferrara Candy "will be a real big player, a large company with a potential market impact that is significant," said Bob Boutin, president of Knechtel, a suburban Chicago confectionery consulting firm.
The new company is likely to have its headquarters in the Chicago area. Ferrara Pan is based in the Chicago suburb of Forest Park, while Farley's & Sathers chief executive and its marketing and sales team work out of Chicago.
Farley's & Sathers is based in Round Lake, a city of about 500 in southwestern Minnesota, where it has a distribution and packaging facility and employs about 250 people, according to a Dun & Bradstreet filing.
The company has almost 1,100 employees and six manufacturing plants, including one in Winona. A news release on the deal contained no information on the future of Farley's Minnesota operations, and the company's owner declined to comment further.
The deal's price wasn't disclosed, as both companies are privately held. Farley's & Sathers is owned by private equity firm Catterton Partners, which will now be the majority investor in the combined company.
The deal is subject to regulatory approval.
Farley's has an estimated $670 million in sales, according to the trade publication Candy Industry, which ranks the company 26th in its annual global top 100 confectionery companies.
Ferrara Pan has an estimated $324 million in sales, according to suburban Chicago-based Candy Industry.
With the merger, Ferrara Candy would be about 17th in Candy Industry's annual ranking, said Bernard Pacyniak, the publication's editor. It would also likely be the largest U.S.-based confectionery firm after such multibillion-dollar behemoths as Mars and Hershey.
Sathers was founded in 1936 by Round Lake grocer John Sather, who started selling bags of cookies and candies to drugstores. Sathers was combined with Farley's in 1996, and by 2000 they were under the wing of Kraft Foods.
But in 2002, Connecticut-based Catterton bought Farley's & Sathers from Kraft and went on a five-year acquisition spree, starting with Hershey's Heide line and ending with Brach's.
Since Catterton's 2002 investment, Farley's & Sathers has also seen non-acquisition growth from new products and increased marketing and distribution, Catterton managing partner Scott Dahnke said in a news release.
Staff writer Patrick Kennedy contributed to this report. Mike Hughlett • 612-673-7003