Packaged food company,
B&G Foods, Inc.
) recently announced that it has entered into a definitive
agreement to acquire Pirate Brands from the New York-based
private company, Robert's American Gourmet Food, LLC, for
approximately $195 million in cash.
American Gourmet does its business as Pirate Brands, which are
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.
American Gourmet is owned by VMG Partners, Driven Capital
Management and founder Robert Ehrlich. B&G Foods is acquiring
the entire Pirate Brands business, including its leased
headquarters and salesforce but excluding its manufacturing
Pirate Brands is expected to generate net sales of $80 million
to $90 million and adjusted EBITDA (earnings before interest,
taxes, depreciation and amortization) of $18 million to $20
million annually after the acquisition. The acquisition is
expected to close in July and BGS will fund it with its remaining
net proceeds from the May 2013 senior notes offering and
revolving credit borrowings.
B&G Foods' snacks portfolio also includes New York Style,
Old London, JJ Flats and Devonsheer brands, which were acquired
in Oct 2012. Last month, B&G Foods acquired the TrueNorth
brand from privately held DeMet's Candy Company.
B&G Foods focuses on acquiring complementary brands that
have strong margins and generate less than $100 million in sales.
Most of the time, 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.
B&G Foods carries a Zacks Rank #3 (Hold). Some other food
stocks that are worth a look include
Flower Foods Inc.
) carrying a Zacks Rank #1 (Strong Buy) and
J&J Snack Foods Corp.
Campbell Soup Company
), both holding a Zacks Rank #2 (Buy).
B&G FOODS CL-A (BGS): Free Stock Analysis
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