Boulder Brands Inc. (BDBD) has been working to improve lives, and Pinnacle Foods Inc. (PF) recently entered into a definitive agreement to acquire Boulder Brands for $11.00 per share. What are the benefits for both companies?
Benefits for Pinnacle Foods
The transaction will Pinnacle’s presence in health and wellness categories.
Also the deal will expand Pinnacle’s presence in the natural and organic retail channel and will provide a new growth platform in refrigerated foods for Pinnacle.
Through this merger Pinnacle will provide its shareholders an immediate and substantial cash value with significant benefits for all stakeholders.
Pinnacle anticipates that, over the next two years, this deal will increase Boulder Brands’ 2015 consensus Adjusted EBITDA by 50%. The anticipated 2017 pro forma Adjusted EBITDA, combined with the net present value of tax benefits totaling $47 million, will result in a purchase price multiple of 10x for PF and Adjusted cash EPS accretion of approximately 8%.
Benefits for Boulder Brands
Through this deal, Boulder Brands will have additional and stronger resources to drive its brands and deliver value to customers and consumers, along with providing new opportunities for employees.
The deal also is expected to bring a seamless transition and accelerate its growth.
About Pinnacle Foods Inc.
The company is a leading producer, marketer and distributor of high quality branded food products, which have been trusted household names for decades.
During the this quarter the company had strong top- and bottom-line results in North America Retail were due to the strength of the base business.
Net sales in the third quarter grew by 2.0%; this growth reflected a 2.6% benefit from acquisition of Garden Protein International Inc.Ă‚ EBIT in the third quarter increased by 5.9% and adjusted EBITDA grew by 7.5%. Gross profit grew by 7.9% versus a year ago.
Consolidated net sales grew 2.0% versus a year ago, reflecting strong growth in North America Retail.
GAAP diluted earnings per share was 41 cents compared to $1.16 in the year-ago period, reflecting the benefit in 2014 of 79 cents per diluted share associated with the termination of the company's merger agreement with Hillshire Brands Co. (HSH).
Outlook
The company expects growth of 9% to 10% for full-year adjusted diluted earnings per share versus a year ago, and productivity is estimated at the high end of the company's 3.0% to 4.0% guidance range.
About Boulder Brands
The company is a marketer of functional food products under the Smart Balance, Earth Balance and Bestlife trademarks. Its products are sold in mass merchandise, grocery, natural food and club stores throughout the U.S. and Canada.
Third-quarter results demonstrate its ability to be more effective in managing its brands and products, and as a result, sales and overall profitability improved meaningfully in the third quarter compared to the second quarter.
Competitors
Based on market cap Pinnacle’s main competitors are General Mills Inc. (GIS) and Mondelez International Inc. (MDLZ) that are trading at P/E ratio of 27.43 and 8.52 while Pinnacle is trading at 29.32.
Pinnacle has a negative one-year EPS of 37.10 while its two competitors are having better one-year EPS growth. Mondelez has 162.10% and General Mills has a negative rate but better than Pinnacle at about 21.30%.
Now we take a look at competitors of Boulder Brands.
Its main competitor is ConAgra Foods Inc. (CAG) which has a very big negative one-year EPS growth at -588.90% while Boulder’s EPS did not face any change in the last 12 months.
Last-quarter trades and main guru shareholders
In the third quarter Pinnacle got a new position in the portfolio of Lee Ainslie (Trades, Portfolio); he became its main shareholder among the gurus with 3.17% of outstanding shares, which is 2.65% of his total assets.
RS Investment Management (Trades, Portfolio), Pioneer Investments (Trades, Portfolio) and Jim Simons (Trades, Portfolio) increased their stakes by 27.14%, 0.22% and 19.65%. They are the second-, third- and fourth-largest guru shareholders of Pinnacle Foods with2.92%, 0.52% and 0.47% of outstanding shares.
Boulder was sold out by Jim Simons (Trades, Portfolio) and Mario Gabelli (Trades, Portfolio) reduced his stake by 4.76% but PRIMECAP Management (Trades, Portfolio) increased his stake by 3.27% and became the main shareholder of Boulder Brands with 14.15% of outstanding shares.
