Hershey announced this month that it has agreed to buy B&G Foods, which owns cheese puffs maker Pirate brands for $420 million in an all cash transaction.
By acquiring B&G Foods, the chocolate company will have rights over snack brands that include Pirate’s Booty, Smart Puffs, and Original Tings as part of the deal.
The deal is also expected to add to Hershey’s financial targets said the company. Hershey said that it plans to finance the transaction with cash reserves as well as short-term borrowings.
It’s a nice pay day for B&G Foods, which bought Pirate Brands back in 2013 for just $195 million. The company has said that it intends to use proceeds from the sale to repay its long-term debt and to possibly fund acquisitions.
“Pirate Brands is a terrific business that has performed very well for us and we believe it will continue to thrive under the ownership of The Hershey Company,” stated Robert C. Cantwell, President and Chief Executive Officer of B&G Foods.
“The transaction we are announcing today is a great example of our ability to create meaningful shareholder value through accretive M&A by acquiring and investing in on-trend food brands. We acquired Pirate Brands in 2013 for approximately $195 million and thanks to the passion, creativity and hard work of our dedicated team of employees, we have more than doubled the value of the business in five short years, creating tremendous value for our shareholders.”
Mr. Cantwell continued, “One of my biggest goals as CEO has been to ensure that B&G Foods remains ready and able to continue our acquisition strategy. By selling Pirate Brands at a very attractive multiple and using the net proceeds to reduce long-term debt, we will significantly reduce our leverage, which positions us very well for future acquisitions.”
“Pirate’s Booty is a leading cheese puffs brand loved by moms and kids as a better-for-you treat,” said Mary Beth West, Chief Growth Officer of The Hershey Company.
“We expect the full Pirate Brands portfolio to be a great fit for Hershey’s growing Amplify business which is targeted toward consumers who are looking for great-tasting snacks without compromise.”
The transaction is expected to close in the fourth quarter of 2018 and is subject to customary regulatory approvals and other closing conditions.