B&G Enters Frozen Business with Green Giant Acquisition
Parsippany, New Jersey, USA-headquartered B&G Foods, Inc. has entered into an agreement to purchase the Green Giant and Le Sueur frozen and canned vegetables brands from General Mills, Inc. for approximately $765 million in cash, subject to an inventory adjustment when the transaction is finalized. The buyer expects the deal to close during the fourth quarter of 2015, subject to customary closing conditions, including the receipt of regulatory approvals.
The announcement came as a surprise to some industry watchers, who though that Bonduelle SCA would take over Green Giant. The Villeneuve d’Ascq, France-headquartered company was reportedly working with the Centerview Partners private equity group to raise sufficient capital for a winning bid.
Green Giant, owned by Golden Valley, Minnesota-based General Mills since its acquisition in 2001, reportedly generates upwards of $700 million in sales per annum. However, after taking a $260 million one-time write-down impairment charge on the value of the brand in late May, General Mills decided to engage the Rothschild investment bank to explore the possibilities of selling the unit.
“We are thrilled to welcome them to the B&G Foods family of brands. For over 100 years, Green Giant and Le Sueur have been providing consumers with great tasting, nutritious vegetables picked at the peak of perfection. We look forward to building on that rich history by offering new and innovative products that will respond to the needs of today’s health conscious consumer,” said Robert C. Cantwell, B&G’s president and ceo.
There are more than 160 products in the Green Giant line, ranging from mono packs of corn, peas, broccoli and baby brussels sprouts with butter to blends and mixes such as Asiago Parmesan Rissotto Vegetables and Italian Herb Steamers. In business for 112 years, the Minneapolis, Minnesota-headquartered company’s animated Jolly Green Giant mascot has been an American brand icon since its first television advertising appearance in 1958.
“Consistent with our strategy, we expect the acquisition to be immediately accretive to our earnings per share and free cash flow,” said Cantwell. In addition, the acquisition marks our entry into the frozen food category, which we believe will open many future growth opportunities.”
B&G Foods projects that following a six to twelve month transition period, the Green Giant and Le Sueur brands will generate on an annualized basis net sales of approximately $550 million, adjusted EBITDA of about $95 million to $100 million, and earnings per share of $0.60. Because the acquisition will be structured as an asset purchase, B&G Foods expects to realize approximately $137 million in tax benefits on a net present value basis.
B&G Foods intends to fund the acquisition and related fees and expenses with additional revolving loans and new incremental terms loans under its existing credit facility. The company has received financing commitments from Barclays Bank PLC, BofA Merrill Lynch and RBC Capital Markets. Barclays and RBC Capital Markets acted as financial advisors.
B&G Foods and its subsidiaries manufacture, sell and distribute a diversified portfolio of shelf-stable foods across the United States, Canada and Puerto Rico. Among its many brands are Ac’cent, B&G, B&M, Baker’s Joy, Bear Creek Country Kitchens, Brer Rabbit, Canoleo, Cary’s, Cream of Rice, Cream of Wheat, Devonsheer, Don Pepino, Emeril’s, Grandma’s Molasses, JJ Flats, Joan of Arc, Las Palmas, MacDonald’s, Mama Mary’s, Maple Grove Farms, Molly McButter, Mrs. Dash, New York Flatbreads, New York Style, Old London, Original Tings, Ortega, Pirate’s Booty, Polaner, Red Devil, Regina, Rickland Orchards, Sa-són, Sclafani, Smart Puffs, Spring Tree, Sugar Twin, Trappey’s, TrueNorth, Underwood, Vermont Maid and Wright’s.