The Hershey Co. has agreed to acquire Pirate Brands, the maker of Pirate’s Booty, Smart Puffs and Original Tings, from holding company B&G Foods Inc. for $420 million. The companies expect the deal to close in fourth quarter, subject to customary approvals and closing conditions.
Pirate Brands will operate under Amplify, Hershey’ better-for-you snacking division, which the chocolate company acquired late last year, in its Austin, Texas, hub. This segment focuses on sparking growth in the warehouse snacking aisle through unique product flavors and forms, such as Skinny Pop, Paqui and Oatmega, according to Hershey.
“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 Hershey. “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.”
Hershey said it expects the deal to accelerate its financial goals, considering Pirate’s Booty has seen an 8% annual increase in retail sales. Additionally, the puffy-snack brand also targets consumers seeking snacks with clean labels and that are free of artificial additives.
“Pirate Brands is a terrific business, and we believe that it will thrive under the ownership of Hershey,” Bob Cantwell, president and CEO of B&G Foods, said. “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.”
B&G Foods intends to use the net proceeds from the sale for the repayment of long-term debt and possible acquisitions. “One of my biggest goals as CEO has been to ensure that B&G Foods remains ready and able to continue our acquisition strategy," said Cantwell. "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.”
Parsippany, N.J.-based B&G Foods manufactures, sells and distributes branded foods in the United States, Canada and Puerto Rico. The company’s portfolio features more than 50 brands, including Back to Nature, B&G, B&M, Cream of Wheat, Green Giant, Las Palmas, Le Sueur, Mama Mary’s, Maple Grove Farms, Mrs. Dash, New York Style, Ortega, Polaner, SnackWell’s and Spice Islands.
Hershey, based in Hershey, Pa., has more than 80 brands that drive more than $7.4 billion in annual revenue, including Hershey's, Reese's, Hershey's Kisses, Jolly Rancher, Ice Breakers and Brookside.