B&G Foods “Actively Seeking” Back to Nature Buyer
B&G Foods is “actively seeking” a buyer for snack brand Back to Nature, stating on this week’s third quarter earnings report that while the brand was performing well enough, the divestment is part of a larger initiative to refocus B&G’s core portfolio and reduce debt.
As a result of this decision, B&G has reclassified the assets of Back to Nature on its balance sheet as “assets held for sale.” The company recorded a pre-tax, non-cash impairment charge of $103.6 million during the quarter, representing the book value of the assets compared to the estimated fair value loss anticipated cost to sell. Business assets include $109.9 million in indefinite-lived trademark intangible assets, $29.5 million of goodwill, $11 million of finite-lived customer relationship intangible assets and $7.4 million of inventories to assets held for sale.
Founded in 2012, Back to Nature was originally structured as a joint venture between Brynwood VI and Mondelez Global, with the former assuming operating control and the latter maintaining a financial stake. In 2013 Back to Nature acquired SnackWell’s cookies from Mondelez, with both brands subsequently acquired by B&G in 2017 for $162.5 million in cash.
At the time of the acquisition, executives said on this week’s earnings call, the brand had $60 million in sales per year, which has since dropped to $50 million.
Earlier this year B&G announced a strategic restructuring to focus its business around four categories: spices and seasonings, frozen and vegetables, meals, and speciality. The company is trying to set up platforms, B&G President and CEO Casey Keller said on the call, that are centered around where it “can build capabilities.” Successful brands will not only align with where B&G has core competencies but also wrap into existing sales and operations infrastructure.
“In conjunction with our transition to a business unit organization structure. We are continuing to review our portfolio to ensure that we focus on brands that are consistent with the strategies of each business unit going forward,” Keller told analysts on the earnings call. “[Back to Nature] is a brand that made sense for B&G Foods to acquire when we were attempting to build our snacking portfolio. However, given our current focus, we now believe that there are better owners.”
Products that no longer fit within those areas, or struggle with growth and profitability will be the key drivers of what brands B&G chooses to divest from, said Bruce Wacha, EVP, Finance and CFO. Potential purchase price will also play a role.
Most recently on the snack front, in 2018 B&G sold Pirate’s Booty for $420 million to the Hershey Company.
“You look at the portfolio, you look at the business units and you say, ‘Does this make sense within the construct of where we’re looking to spend money to invest in the best brands and build the business,’” Wacha said.
