Aug. 12 at 12:40 AM
$BGS Earnings were fine, nothing extraordinary either way. It hit a 10-year low today before the report. The debt load is just so heavy currently. However, when you start to look at the company as an acquisition target (especially by someone with a more robust balance sheet), the picture starts to look different.
If an acquirer were to pay a 40% premium to the current stock price and refinance the debt (assuming they have an investment grade credit rating), I'm calculating
$35-40M of annual after-tax interest savings (and yes, they might have to wait for specific provisions of the newly issued notes to lapse before refinancing those). Then layer in synergies of say
$25-50M annually (depending on the acquirer).
Now instead of a
$70-80M FCF run rate annually, you're closer to
$150M annually, meaning the return on investment of the acquisition could be close to 35-40%, if they pay
$5/share for the acquisition.
Let's get some strategic acquirers on the phone.
