B&G Foods’ Robert Cantwell on selling Pirate Brands: ‘Generating returns for our shareholders’ is primary strategy
B&G bought the cheese puffs maker in summer of 2013 for $195m, and has subsequently grown $12m in net sales since then. It sold Pirate Brands to Hershey for $420m in September this year.
Cantwell noted: “An additional benefit of the sale is cash that it provided for the repayment of long-term debt.”
During B&G’s recent Q3 earnings, he detailed the rationale behind the business’ divestiture.
Cantwell said: “We have always been an acquisition-driven business, and that has generally meant we are growing through acquisitions. That is still our intention.
“Our primary strategic rationale has been generating good returns for our shareholders,” typically done through “buying smart and staying disciplined on price.”
He added B&G initially bought Pirate Brands at an attractive price and wanted to build it to be one of the best warehouse snack brands in North America.
Moving away from snacks
Selling Pirate Brands was not an easy move as B&G wanted to become a better-for-you salty snack player five years ago, according to Cantwell.
However, after reviewing the company’s overall portfolio, he said, “there are things that just don’t make sense,” noting that B&G is still a small player in the US snack market, despite having a high-growth brand like Pirate.
“We were not going to grow [our snack business] through a lot of acquisitions… and Pirate’s being [a small part of our overall business] and not like everything else we do made it more difficult and more cumbersome through our distribution network. It was just time to move on from snacks” to better focus on other existing categories, such as center-store and frozen products.
B&G’s snacks and crackers portfolio currently comprises eight brands, including Back to Nature and New York Flatbreads, according to its website.
However, Cantwell does not consider these brands as a cracker or bagel chip business because they are sold in deli. “[They are] more center-of-the-store oriented, so we really didn’t have another snack business [before Pirate was sold],” he said.
“We are really focus today on center of the store and expanding our footprint in frozen.”
B&G is currently consolidating its frozen distribution network, expected to save between $3m and $4m in operations in future earnings.
