Food Business News - June 18, 2013 - (Page 28)

Wenner sees winner in Pirate Brands acquisition PARSIPPANY, N.J. — For B&G Foods, Inc., the purchase of Pirate Brands for approximately $195 million from VMG Partners, Driven Capital Management, Robert Ehrlich and others represents something of a shift in the former’s acquisition strategy, said David L. Wenner, president and chief executive officer. “The typical business we purchase has a history of declining sales,” Mr. Wenner said in a June 10 conference call with analysts to discuss the acquisition. “This business has been experiencing double-digit growth for several years. We typically have to refresh the brand image and packaging starting from a dead stop position. Here, the brand has a profile that is relevant to today’s trend toward healthy snacking, and the current packaging does an excellent job of conveying a fun brand and ‘healthier-foryou’ snack. “We feel that this very different positioning and the growth prospects it implies are worth a higher price multiple. And even at this multiple we believe that the price we’re paying for Pirate Brands is consistent with our acquisition criteria for immediately accretive free cash flow, EBITDA and earnings per share. After we integrate the brands and achieve full synergies, which we should expect to do by the beginning of 2014, we project that our adjusted EBITDA for the acquired brands will reach approximately 22% of net sales.” Mr. Wenner said Pirate Brands is expected to have annualized net sales of approximately $80 million to $90 million, and adjusted EBITDA of $18 million to $20 million. Founded in 1987, Pirate Brands consists of three separate brands: Pirate’s Booty, Smart Puffs and Original Tings. Pirate’s Booty accounts for about 90% of Pirate Brands’ net sales, but all are positioned as all-natural, gluten-free healthy choices for adults and children, Mr. Wenner said. “We believe that the Pirate’s Booty line is the most promising in the portfolio in terms of extend-ability into other snacking products,” he said. “But even in its present form, the business has been growing at a doubledigit rate for the past several years.” Mr. Wenner attributed recent growth to expanded distribution into club and other channels, as well as the development of new package sizes for each channel. the ingredient & blending solution. one stop shopping national distribution B.C. Williams Bakery Service BCW Food Products 800.527.4104 a baking tradition since 1935. 28 FOODBUSINESS NEWS ® “As with many snack businesses, warehouse clubs are an important part of the business and were approximately 25% of net sales in 2012,” he said. “In this sense, Pirate Brands fits the profile of our existing snacks businesses and should add mass to our current efforts to penetrate those channels. Nearly 60% of Pirate Brands’ 2012 net sales came from supermarkets and the supply chain is a mix of direct and specialty distributor shipments depending on the customers.” Mr. Wenner said potential growth opportunities exist for expanded flavor offerings in the various sizes as the large majority of sales currently are done in one flavor — white cheddar. Pirate’s Booty primarily has been marketed toward children, a target B&G does not normally aim for, but Mr. Wenner said the brand’s appeal is broad. “The brand is oriented toward kids to a great degree,” he said. “But when you look into the data, kids are certainly not the only users by far. The fact that it is in the house tends to mean that everyone is eating the product and, in fact, everyone I have talked to this morning is an adult that says, ‘Oh, I eat that all the time.’ … Although it is positioned as a kids snacking brand, it is certainly something that adults eat as well. Having said that, we think it’s an important proposition that you can extend this brand with the idea that it is a healthy kids snack into other healthy kids snacking occasions. And that is certainly one of the attractions that we have.” The acquisition of Pirate Brands would be B&G’s third since last fall. In May, B&G acquired the TrueNorth brand from DeMet’s Candy Co. In October 2012, it closed a deal to buy New York Style, the maker of Bagel Crisps, and Old London brands. FBN June 18, 2013

Table of Contents for the Digital Edition of Food Business News - June 18, 2013

Food Business News - June 18, 2013
Diamond Foods challenged by walnut supply and Emerald relaunch
Market Insight: Mid-year commodity outlook
Fruitful ice cream options
Table of Contents
Web Contents
Editorial - Proposed SNAP cuts will be felt throughout the food sector
Flavored milk to grow at double the rate of white milk
Smucker exits bulk coffee, remains bullish on K-Cups
C.e.o. in unsolicited takeover bid for Dole
Heinz acquisition completed, new c.e.o. takes over
Mondelez to offer coffee pods compatible with rival’s system
Tyson Foods expands prepared foods portfolio with acquisition
Nielsen honors Breakthrough Innovation winners
Taco Bell taking charge of breakfast
Expanded breakfast helps lift McDonald’s May sales
McCormick & Company sees growth ahead from innovation and acquisitions
Wal-Mart doubles-down on fresh produce promise
Morningstar buy may be just the beginning for Saputo
Target delves deeper into organics
PepsiCo hires chief marketing officer
Wenner sees winner in Pirate Brands acquisition
Single-serve coffee' harbinger of things to come at TreeHouse'
Washington - Senate passes farm bill, stage set for debate over SNAP cuts
Sports Nutrition - Improved performance
Ingredient Innovations - Diverse Dynamos for Digestion
I.F.T. to convene in Chicago
New Food Products
Ingredient Market Trends - Imports from Mexico send U.S. sugar stocks to record highs
Ingredient Markets
Supplier Innovations and News
Ad Index
Food Business in the News

Food Business News - June 18, 2013