Hershey (NYSE: HSY) agreed on Wednesday to buy Pirate Brands from B&G Foods for $420 million in an all-cash deal, giving the chocolate maker rights over snack brands such as Pirate's Booty, Smart Puffs and Original Tings.
A statement out Wednesday says the deal is expected to add to Hershey's financial targets as it delves into the more than $2.5 billion cheese puffs market.
Hershey intends to finance the transaction with cash reserves as well as short-term borrowings and expects the deal to close in the fourth quarter of 2018.
B&G Foods, which bought Pirate Brands in 2013 for about $195 million, said it would use the net proceeds from the sale for repaying its long-term debt and for funding possible acquisitions.
Hershey Chief Growth Officer Mary Beth West said, "Pirate’s Booty is a leading cheese puffs brand loved by moms and kids as a better-for-you treat. 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."
This strategic acquisition is expected to be accretive to Hershey’s financial targets given the strong growth trajectory and solid margin structure of the Pirate Brands business.
Pirate’s Booty is a fast-growing brand in the more than $2.5B cheese puffs category, with retail sales up over 8% on a year-over-year basis, and a market leader for consumers seeking snacks with clean labels and no artificial flavors, colors or preservatives.
Hershey shares faded 42 cents early in Thursday’s session to $105.60
