B&G Foods (BGS) to Acquire ACH Food Companies Spice Business for ~$365M
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B&G Foods, Inc. (NYSE: BGS) announced today that it has entered into an agreement to acquire the spices and seasonings business of ACH Food Companies, Inc., a leading supplier of spices and seasonings to retail and food service customers, for approximately $365 million in cash, subject to a post-closing inventory adjustment. The ACH spices and seasonings business includes the Spice Islands, Tone’s and Durkee brands. The business also includes Weber brand sauces and seasonings, which are sold under license. As part of the acquisition, B&G Foods is also acquiring a manufacturing facility in Ankeny, Iowa. B&G Foods expects the acquisition to close during the fourth quarter of 2016, subject to customary closing conditions, including the receipt of regulatory approvals.
“We are very pleased to add ACH’s spices and seasonings business, including the Spice Islands, Tone’s, Durkee and Weber brands to the B&G Foods portfolio. This acquisition will significantly broaden our position in the large and growing spices and seasonings category, which we believe is very relevant to today’s consumer, who is looking for healthier options, simple ingredients and enhanced flavor,” stated Robert C. Cantwell, President and Chief Executive Officer of B&G Foods.
Mr. Cantwell continued, “Consistent with our acquisition strategy, we expect the acquisition to be immediately accretive to our earnings per share and free cash flow.”
B&G Foods projects that beginning in 2017, the acquired business will generate on an annualized basis net sales in the range of $220.0 million to $225.0 million, adjusted EBITDA in the range of $38.0 million to $40.0 million and adjusted diluted earnings per share in the range of $0.26 to $0.28. Because the acquisition will be structured as an asset purchase, B&G Foods expects to realize approximately $83.0 million in tax benefits on a net present value basis. At the midpoint of B&G Foods’ 2017 projected adjusted EBITDA for the business, the acquisition represents a purchase price multiple of approximately 9.4 times adjusted EBITDA (or 7.2 times adjusted EBITDA net of expected tax benefits).
B&G Foods intends to fund the acquisition and related fees and expenses with cash on hand, including the net proceeds of its August 2016 public offering of common stock, and additional revolving loans under its existing credit facility.
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