Back to top

Analyst Blog

Packaged food company, B&G Foods, Inc. (BGS - Snapshot Report) 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 facilities.

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. (FLO - Snapshot Report) carrying a Zacks Rank #1 (Strong Buy) and J&J Snack Foods Corp. (JJSF - Snapshot Report) and Campbell Soup Company (CPB - Analyst Report), both holding a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UTD THERAPE… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%