Hershey has entered into an agreement to acquire B&G Foods’ Pirate Brands business – which includes the Pirate’s Booty, Smart Puffs and Original Tings brands – in a deal worth $420 million.
Pennsylvania-headquartered Hershey said that with retail sales up 8% on a year-over-year basis, Pirate Brands is a “market leader for consumers seeking snacks with clean labels and no artificial flavours, colours or preservatives”.
The move sees Hershey expand in the cheese puffs and savoury snacks market. Pirate Brands will operate within Hershey’s “better-for-you” snacking unit Amplify Snack Brands, which it bought last year for around $1.6 billion.
The Amplify business – which produces brands such as Skinny Pop, Paqui and Oatmega – helped Hershey record a 5.3% net sales rise in its most recent quarterly figures.
B&G Foods acquired Pirate Brands in 2013 for $195 million and it intends to use the proceeds from the sale for the repayment of long-term debt and possible acquisitions.
Hershey chief growth officer Mary Beth West said: “Pirate’s Booty is a leading cheese puffs brand loved by moms and kids as a better-for-you treat. 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.”
B&G Foods CEO Robert Cantwell added: “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.
“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.”
He added: “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.”
By Jules Scully
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