National Bank Financial analyst Vishal Shreedhar would have preferred it demonstrate traction with its existing organic growth initiatives prior to engaging in M&A. Shares of the Vancouver-based specialty foods company slid 0.8 per cent after the premarket unveiling of the deals for NSP Quality Meats (with plants located in Oklahoma, Texas and Missouri), Casa Di Bertacchi (New Jersey) and Italia Salami (Ontario).
It also completed the sale and leaseback of its recently expanded Hempler’s deli meats production facility in Washington for gross proceeds of approximately US$68-million. “The acquired businesses have a combined annual sales of US$200-million,” said Mr. Shreedhar. “We anticipate these transactions will be moderately accretive to 2025 EPS; we will update our estimates as more information becomes available. Recall last quarter, PBH indicated four M&A opportunities ($331-million sales) were at advanced stages; this suggests one potential advanced stage opportunity remains.” “Recall Specialty Foods (SF) growth is expected to be primarily driven by U.S. initiatives. The acquisitions of NSP Quality Meats and Casa Di Bertacchi are expected to improve access to additional U.S. markets and increase capacity for U.S. cooked protein initiatives. The Italia Salami acquisition is smaller, but is expected to support the Concord business (cooked protein; additional local production to support the Marcangelo brand).” The analyst maintained his investing view on Premium Brands, reiterating a “sector perform” rating and $99 target. The average target on the Street is $102.40, according to LSEG data. “Over the medium term, we believe PBH’s outlook will be supported by solid organic growth and EBITDA margin expansion (NBF models 9.5 per cent in 2025 from 8.9 per cent in 2023),” he said. “PBH indicated last quarter that its acquisitions are expected to be neutral to slightly helpful to its balance sheet. We model 2025 leverage of
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