Boulder Brands (BDBD) Stock Soars on $975 Million Pinnacle Foods Deal

NEW YORK (TheStreet) -- Boulder Brands (BDBD) stock is gaining 8.54% to $10.93 on heavy trading volume on Tuesday morning after the company agreed to be acquired by Pinnacle Foods (PF) in a deal valued at $975 million, including about $265 million in net debt.

Parsippany, NJ-based Pinnacle Foods will pay $11 for each Boulder Brands share in a transaction that will boost the food company's presence in the health and wellness, natural and organic categories.

Boulder Brands, based in Boulder, CO, manages several food brands, including Udi's, Glutino, EVOL, Smart Balance and Earth Balance.

"In addition to being a synergy-rich, accretive transaction with on-trend brands, the acquisition provides us with an important health and wellness talent pool," Pinnacle Foods CEO Bob Gamgort said in a statement.

The acquisition is expected to close in the first quarter of 2016.

So far today, 25.49 million shares of Boulder Brands have exchanged hands, compared with its average daily volume of 546,265 shares.

Separately, TheStreet Ratings team rates BOULDER BRANDS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

We rate BOULDER BRANDS INC (BDBD) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, impressive record of earnings per share growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and generally higher debt management risk.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has significantly increased by 135.03% to $0.39 million when compared to the same quarter last year. In addition, BOULDER BRANDS INC has also vastly surpassed the industry average cash flow growth rate of -20.72%.
  • BOULDER BRANDS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BOULDER BRANDS INC swung to a loss, reporting -$2.09 versus $0.16 in the prior year. This year, the market expects an improvement in earnings ($0.22 versus -$2.09).
  • BDBD, with its decline in revenue, slightly underperformed the industry average of 6.5%. Since the same quarter one year prior, revenues slightly dropped by 0.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The debt-to-equity ratio of 1.20 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, BDBD's quick ratio is somewhat strong at 1.05, demonstrating the ability to handle short-term liquidity needs.
  • BDBD has underperformed the S&P 500 Index, declining 6.70% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • You can view the full analysis from the report here: BDBD

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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