B&G Foods, Inc.
) recently entered into an agreement to acquire packaged foods
company, Specialty Brands of America, Inc. from affiliates of
American Capital, Ltd.
) for about $155 million in cash. The acquisition is expected to
close during the second or third quarter of 2014.
The deal includes acquisition of Specialty Brands' largest brand
- Bear Creek Country Kitchens hearty dry soups as well as other
brands like Spring Tree, Cary's, and MacDonald's syrups and New
York Flatbreads and Canoleo margarine. These brands complement
the existing portfolio of B&G Foods.
As a packaged foods company, B&G Foods is set to beef up its
product offerings as evident from its three acquisitions in 2013,
including Pirate Brands from Robert's American Gourmet Food,
TrueNorth from DeMet's Candy Company and New York Style and Old
London from Chipita America.
Though these acquired brands are parts of larger companies, all
of them have a distinctive competitive advantage, strong margins
and generate near about $100 million in sales. These acquisitions
made significant contribution to B&G Foods 2013 top line. The
acquisition of Specialty Brands is expected to generate similar
MD-based, American Capital Ltd. provides capital to middle-market
companies with sales between $10-$750 million. In addition to
Specialty Brands, the company has invested across a diverse range
of industries and geographies. American Capital and its
affiliates invest up to $500 million per company in North
America. At times, American Capital sells a portfolio company in
order to improve better allocation of its resources.
As both BGS and American Capital reported disappointing earnings
result in the last reported quarter, both the companies currently
have a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the packaged goods sector include
Diamond Foods, Inc.
J&J Snack Foods Corp.
). Both the stocks hold a Zacks Rank #2 (Buy).
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