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American Capital Continues Sell-Offs

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Continuing with its strategy to book profit by shedding mature portfolios, private equity firm American Capital, Ltd. (ACAS) announced yet another sell-off. The company declared the vending of its portfolio company BCCK Holdings to New Jersey-based B&G Foods Inc. (BGS).

How Profitable the Deal Was?

Through this deal, American Capital and its affiliated funds received equity proceeds worth $93 million and reaped a gain of $60 million, subject to post-closing adjustments. Of this, American Capital’s share stood at $54 million in equity proceeds and $35 million gain.

The company also garnered dividend income of $20 million and additional realized gains over the life of its investment. Further, the company earned 17% compounded annual rate of return on its debt and equity securities over the life of its investment.  Notably, the company received 2.2 times of its equity investment.

The Entry & Exit

BCCK Holdings is the parent company of Specialty Brands of America, Inc. (commonly called SBA), one of the major firms in the packaged foods industry. SBA’s portfolio includes notable brands like ‘Bear Creek Country Kitchens’ – a popular name in dry soups and savory pasta dishes, while marketing  maple syrup and sugar free syrups globally through the Spring Tree and Cary's brands.

American Capital’s alliance with SBA dates back to Dec 2003 when it invested $68 million as a part of its One Stop Buyout strategy. The strategy focuses on making investments in middle market companies and capitalizing on their robust standing in the market while teaming up with the management teams.  Notably, SBA grew over the years through meaningful acquisitions and expansion of its line of products.

B&G Foods, which is also in the packaged foods industry, is engaged in manufacturing, marketing and distribution of high-quality, branded shelf-stable food products.

Evercore Partners Inc. (EVR) served as financial advisor to American Capital.

In Conclusion

The latest move marked American Capital’s third divestiture this year. Prior to this, the private equity and venture capital firm had carried out two divestitures. On Apr 2, the company sold its interest in ADF Holdings, Inc. to Calumet Specialty Products Partners LP (CLMT), a North America-based producer of high-quality specialty hydrocarbon products. Alongside, on Apr 17, American Capital sold SPL Acquisition Corp. to Shenzhen Hepalink Pharmaceutical Co., Ltd., one of the major suppliers of heparin sodium in the global market.

As private equity markets continue to rebound, we look forward to American Capital’s greater involvement in strategic investments, which are poised to benefit the company and investors in the long run.

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