Packaged food company,
B&G Foods, Inc.
) recently completed its previously announced acquisition of
Pirate Brands from the New York-based private company, Robert's
American Gourmet Food, LLC, for approximately $195 million in
Last month, BGS announced its intention to buy Pirate Brands
under which American Gourmet sells its natural snack food
products. With the growing importance of nutritious snacking, the
acquisition of Pirate's all-natural, gluten-free and trans-fat
free snack brands like Pirate's Booty, Smart Puffs and Original
Tings will boost B&G Foods' snacks portfolio.
The Pirate's Booty brand of corn puff snacks is an especially
prudent portfolio addition since it has been experiencing
double-digit growth for several years and represents 90% of
American Gourmet's sales. B&G Foods' snacks portfolio also
includes New York Style, Old London, JJ Flats and Devonsheer
brands which were acquired in Oct 2012.
American Gourmet is owned by VMG Partners, Driven Capital
Management and founder Robert Ehrlich. B&G Foods has acquired
the entire Pirate Brands business, including its leased
headquarters and sales force but excluding its manufacturing
facilities. The company funded the acquisition with the remaining
net proceeds from the May 2013 senior notes offering and
revolving credit borrowings.
Pirate Brands is expected to generate net sales of $80 million
to $90 million and adjusted EBITDA (earnings before income tax,
depreciation and amortization) of $18 million to $20 million
annually after the acquisition.
B&G Foods focuses on acquiring complementary brands that
have strong margins and generate less than $100 million in sales.
Generally, these are smaller brands from large food companies,
which have limited competition. B&G Foods' investments in
these brands help to generate huge free cash flow and ensure
profitability in the long run. Prior to the Pirate Brands
acquisition, B&G Foods acquired TrueNorth brand from
privately-held DeMet's Candy Company in May this year.
B&G Foods carries a Zacks Rank #1 (Strong Buy). Some other
food stocks that are worth a look include
Flower Foods Inc.
Kraft Foods Group, Inc.
Campbell Soup Company
). While Flower Foods carriesa Zacks Rank #1 (Strong Buy), the
other two companies hold a Zacks Rank #2 (Buy).
B&G FOODS CL-A (BGS): Free Stock Analysis
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