Bg Green Giant

Image source: B&G Foods.

What: Shares of food manufacturer and distributor B&G Foods (NYSE:BGS) soared as much as 14.3% higher on Thursday. The company is acquiring frozen foods and canned vegetable brands Green Giant and Le Sueur from sector rival General Mills (NYSE:GIS). Both stocks rose on the news.

So what: B&G is paying $765 million in cash for these history-rich brands, and the deal is expected to close in the fourth quarter of 2015. Financing comes from a batch of revolving loans on top of B&G's revolving credit lines, managed by a consortium of three major banks.

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Now what: B&G expects this acquisition to add $550 million of net sales after a brief transitional period, alongside $0.60 of additional earnings per share. To put these numbers into perspective, B&G's sales over the last four quarters stand at $858 million, yielding earnings of $0.83 per share. This is a deal of game-changing proportions.

"The acquisition marks our entry into the frozen food category, which we believe will open many future growth opportunities," said B&G CEO Bob Cantwell in a press statement.

This is B&G's sixth brand buyout since 2013, and the 29th of an acquisition spree that started in 1997. Buyouts are an important growth strategy for this company, and B&G hopes to strengthen Green Giant's market position further via targeted marketing campaigns and cross-selling synergies with B&G's existing brands.

General Mills will hold on to Green Giant's operations in Europe and a handful of other overseas markets, run under a paid license from B&G. For the parent company of household brands such as Cheerios, Pillsbury, Betty Crocker, and Haagen-Dazs, the sale is a focusing move. General Mills wants to double down on its greatest growth properties, and Green Giant didn't cut the mustard. Those $550 million of annual sales that hold so much promise for B&G only add up to 3.1% of the larger company's trailing sales.

Anders Bylund has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.