Highlander gobbles up gummy maker Queen City Candy

  • Vince Klee founded Queen City in 1983
  • Highlander does not have LPs or a fund
  • Highlander acquired 10 brands from Huhtamäki Oyj in April

Highlander Partners LP, which owns brands Jolly Rancher and Milk Duds, is continuing its push into gummy sweets with its acquisition of Queen City Candy.

Financial terms of the deal, announced July 6, weren’t disclosed.

Queen City, Greendale, Indiana, makes candies such as gummy bears, neon worms, peach rings and gum drops. Vince Klee is president of Queen City, which he founded in 1983.

Queen City holds about 5 million pounds of candy. It can supply sweets to 1,000 customers globally.

The deal comes a little more than two months since Highlander bought the IP, and associated licensing agreements and warranties, for a portfolio of 10 candy and chocolate brands from Huhtamäki Oyj in April.

The transaction included Jolly Rancher, Payday, Milk Duds and Whoppers. Highlander said it would continue to license the 10 brands to Hershey Co under the same terms and conditions as existing licensing agreements.

Highlander’s candy portfolio includes Better Brands, which owns Gimbals, the maker of gourmet jelly beans and gummy vitamins, and Hillside Candy, which offers organic, sugar free and confectionery hard candies and gummies.

The Dallas middle-market firm believes the gummy confection and vitamin space will grow at a significant rate, said Jeff Hull, president and managing partner, in a statement.

“QCC’s capabilities extend beyond regular confection products, and we believe that we can capitalize on the industry trends and the uniqueness of the company’s assets while pursuing gummy vitamin and other confection and wellness strategies over the next few years,” Hull said.

Highlander has more than $2 billion of assets under management.

Unlike a traditional PE firm, Highlander does not have LPs or a fund but manages its own capital. It also doesn’t have a specific holding period for its deals.

Highlander typically invests from $10 million to $75 million equity in U.S. companies and from $10 million to $50 million for Central European companies. Sectors of interest include manufacturing, food and beverage, chemicals and consumer products.

Last month, Highlander sold Versatek Holdings to AZEK Co, a portfolio company of Ares Management and Ontario Teachers’ Pension Plan.

Highlander in January acquired Chicago Custom Foods LLC, which does business as Kernel Season’s. The sellers were VMG Partners and Brian Taylor, the founder of Kernel Season’s.

Highlander declined comment. Queen City Candy could not be reached for comment.

Action Item: Contact Mark Blanchat, a Highlander partner, at mblanchat@highlander-partners.com