B&G Foods, Inc. announced that it has completed the acquisition of the spices and seasonings business of ACH Food Companies, Inc., a supplier of spices and seasonings to retail and food service customers, for $365 million in cash, subject to a customary adjustment based upon inventory at closing. B&G Foods expects the acquisition to be immediately accretive to its earnings per share and free cash flow.
B&G Foods projects that after the acquisition is fully integrated 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 was 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’ post-integration 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).
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 also acquired a manufacturing facility in Ankeny, Iowa.
B&G Foods funded 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.