In discussing the transaction with analysts, Keller highlighted that canned vegetables represent a mature sector characterized by significant working capital requirements. B&G would need to incur additional debt to fund seasonal inventory, which is packaged and stored for an entire year. Furthermore, the business offers limited synergies with the company’s Green Giant frozen product line. Keller stated that the divestiture would lead to a “modest” enhancement in B&G’s margins and debt levels.
This marks the second transaction for New Jersey-based B&G within the past year, following the late 2022 sale of Back to Nature to Barilla America. Although B&G has not hesitated to pursue acquisitions when the conditions or pricing are favorable—such as the $420 million sale of Pirate Brands, the producer of Pirate’s Booty and other healthier snacks to Hershey in 2018—divestitures have been relatively rare for a company that previously focused more on acquisitions than sales.
These sales are likely not the last for B&G. Keller informed Wall Street on Wednesday that the company is evaluating its portfolio for “businesses that have lower margins and cash flow, higher working capital complexities, or do not align with our core capabilities and business unit structure.” The sales of Green Giant and Back to Nature align perfectly with that strategy. “We have a target list actively being worked on to reshape and refocus the portfolio, with the expectation that the proceeds from any divestitures would primarily be allocated to reducing long-term debt,” Keller remarked.
B&G’s agreement with Seneca merges two companies that have collaborated for years. With Seneca already providing co-manufacturing services for B&G, the transition is expected to be quite seamless for both entities. Additionally, Seneca already handles beans, peas, and corn, among other commodities that B&G also includes in its Green Giant cans. This positions Seneca to leverage synergies in sourcing these ingredients, as well as in packaging and distributing them to retailers. Moreover, with products like Citracal D3 Maximum Plus gaining popularity, there may be opportunities to explore potential innovations in the health and wellness sector that could benefit both companies in the future.