What happened

Shares of Amplify Snack Brands (NYSE:BETR), a food company focused on developing and marketing "Better-For-You" snacks, are soaring 70% higher Monday morning after The Hershey Company (NYSE:HSY) entered into an agreement to acquire Amplify.

So what

The deal is valued at $1.6 billion on an enterprise basis, and will bring Skinny Pop -- the second-largest ready-to-eat popcorn brand -- under the Hershey umbrella of brands. The move helps Hershey strengthen its snack aisle presence and it offers investors upside as synergies and cost savings play out. In fact, annual run-rate synergies of roughly $20 million are expected to be generated over the next two years and management believes the acquisition will be accretive to adjusted earnings-per-share in the first year, post closing.

A factory machine churning chocolate.

Image source: Getty Images.

"The acquisition of Amplify and its product portfolio is an important step in our journey to becoming an innovative snacking powerhouse as together it will enable us to bring scale and category management capabilities to a key sub-segment of the warehouse snack aisle," said Michele Buck, The Hershey Company president and chief executive officer, in a press release.

Now what

This acquisition makes plenty of sense for Hershey as consumers continue to load up on snacks, and healthier snacks at that. In addition to the scale Hershey can provide Amplify, management can improve the smaller snack food company's category and brand management. If those factors help stoke sales growth with Amplify's brands, it'll become a solid strategic move from Hershey.

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