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B&G Foods Offers Common Stock

Zacks Equity Research

B&G Foods, Inc. (BGS) recently announced that it will commence a public offering of 3,629,165 shares of its common stock. The packaged food company also intends to provide the underwriters with a 30-day option to purchase up to 544,375 additional shares of common stock.

The net proceeds from the offering will be used for general corporate expenses, which may include repayment of the company’s long-term debt and expenditures towards the acquisition of the New York Style and Old London brands and any acquisitions that may take place in the future.

On September 19, 2012, B&G announced the acquisition of the New York Style and Old London brands from Chipita America, Inc. for $62.5 million in cash. The purchase – expected to close during the fourth quarter of 2012 – also includes manufacturing facilities in Yadkinville, North Carolina. B&G expects to generate $45 to $50 million of revenue from this acquisition in fiscal 2013.

The proposed acquisition will strengthen the company’s product portfolio, as New York Style and Old London are already established brands in the snacking segment.  New York Style offers traditional bakery products such as Original Bagel Crisps, Pita Chips, Mini Bagel Crisps and Panetini Italian Toast. Old London offers a large number of Melba products such as Melba Toasts and Melba Rounds.

Some of the proceeds from the above-mentioned common stock offering may be used to pay for the expenses incurred in this acquisition. A part of the proceeds may also be used for repayment of long-term debt of the company. As of June 30, 2012, the company had $702.1 million of long-term debt.

B&G Foods, Inc carries a Zacks #3 Rank that translates into a short-term ‘Hold’ rating. Longer-term, we are maintaining our Neutral recommendation on B&G Foods, Inc.

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