Boulder Brands is headquartered in downtown Boulder at 1600 Pearl St. on the third floor, which was added to the building in 2013 so that the company could move in. (BizWest staff)

Pinnacle Foods to acquire Boulder Brands for $710M

BOULDER — Boulder Brands, the packaged-foods company that has encountered plenty of turbulence over the past year, is being sold for $710 million.

New Jersey-based Pinnacle Foods Inc. (NYSE: PF) announced on Tuesday morning that the company has struck a deal to acquire Boulder Brands (Nasdaq: BDBD) for $11 per share. In addition, Pinnacle will assume about $265 million in Boulder Brands’ debt, bringing the full value of the deal to $975 million. The deal is expected to close in  first quarter 2016.

Boulder Brands’ stock price, which closed at $10.07 per share on Monday, zipped up to $10.92 in pre-market trading Tuesday.

Pinnacle officials said their intent is to retain Boulder Brands’ 43,000-square-foot downtown Boulder headquarters. Boulder Brands leases all 18,309 square feet of the third floor at 1600 Pearl St., which was added to the building in 2013 to accommodate the company’s move from Niwot. Last year, the company took over another 25,000 square feet in the building’s basement and first floor.

Boulder Brands’ offerings include the Glutino, Udi’s Gluten Free, Earth Balance, Level Life and Smart Balance brands. Pinnacle’s brands include Duncan Hines, Vlasic and Mrs. Butterworth’s.

Boulder Brands officials couldn’t immediately be reached for comment.

“The acquisition of Boulder Brands further expands our health and wellness portfolio, currently anchored by the Birds Eye and garden brands,” Pinnacle’s chief executive Bob Gamgort said in a press release. “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 in Boulder, Colorado.”

Signs have pointed toward an acquisition of Boulder Brands in recent months. In August, the company suspended its search for a permanent CEO while the board of directors explored “strategic and financial alternatives.” That followed July news that activist investor Glenn Welling — known for pushing companies to make major changes or pursue sales — had taken a 9.6 percent stake in the company.

In July, the company cut 15 percent of its salaried jobs as part of a corporate restructuring. That came a month after CEO Stephen Hughes resigned amid turmoil that included a diving stock price, a trio of shareholder lawsuits against the company, and a lawsuit filed by Heinz alleging trademark infringement. The lawsuits remain pending.

Boulder Brands’ share price has recovered some in recent months following a low in July of $6.28. But it’s been a rocky 19 months for the company’s shareholders.

The shareholder lawsuits alleged that the company, between Dec. 23, 2013 and Oct. 22, 2014, made false and misleading statements that overstated the financial well-being of the company and failed to disclose various adverse details related to the company’s financial health and outlook.

After the company announced Oct. 22, 2014 that the company had faced “a number of headwinds that impacted our financial results … resulting in a larger than expected decline,” Boulder Brands shares dove from $12.73 to $8.99 in a two-day span. Just six months earlier, they’d traded above $18 per share.

Shares have hovered mostly between $8 and $9 since August when the company suspended its CEO search.

Earlier this month, Boulder Brands posted a third-quarter profit of $354,000, or 1 cent per share, compared with a $132.2 million loss for the same period in 2014. Revenue for the quarter was down slightly to $132.9 million.

“After a thorough review of strategic alternatives to enhance shareholder value, we are pleased to provide our shareholders with immediate and substantial cash value,” Dean Hollis, chairman of the Boulder Brands’ board, said in a statement. “In addition to shareholder value, this combination provides significant benefits for all stakeholders.  Boulder Brands’ purpose has been to ‘lead change and improve lives’ and today marks an important milestone in that journey.  Together with Pinnacle Foods, Boulder Brands will have additional and stronger resources to drive our brands and deliver value to customers and consumers, while providing new opportunities for employees. We expect a seamless transition and look forward to accelerating our growth across an impressive collection of health and wellness brands as part of Pinnacle Foods.”

Boulder Brands was founded as Boulder Specialty Brands Inc. in 2005 and held an initial public offering that year. The company changed its name to Smart Balance Inc. in 2007 when it acquired GFA Brands Inc., parent company of the Smart Balance and Earth Balance Brands. The company changed its name again in 2013 to Boulder Brands Inc.

Boulder Brands had 900 full-time and part-time employees as of Dec. 31 according to the company’s annual report. But that was before the July layoffs. The company never disclosed the exact number of employees affected by those job cuts.