J. M. Smucker Company signs definitive agreement to sell US baking business

USA – The J. M. Smucker Company, an American manufacturer of fruits spreads and toppings, has announced the signing of a definitive agreement to sell its U.S. baking business to Brynwood Partners, in a transaction valued at US$375 million.

According to the company, the business generated net sales of approximately US$370 million for the Company’s fiscal year ended April 30, 2018, which were primarily reported in its U.S. Retail Consumer Foods segment.

The transaction does not include the Company’s baking business in Canada.

“The divestiture reflects our strategy to further focus our portfolio and develop a stronger presence in pet food, coffee, and snacking — all large, growing categories with sustainable growth projections,” said Mark Smucker, President and Chief Executive Officer.

Pillsbury, Martha White, and Hungry Jack remain iconic brands and, although they no longer align with our strategic priorities, we are confident they will be nurtured at Brynwood.

While the decision to divest these brands was difficult, it underscores our commitment to allocating resources toward those areas of the business critical to our growth.”

The company said it expects the divestiture to be dilutive to its adjusted earnings per share by US$0.25 to US$0.30 on a full-year basis, reflecting foregone profit related to the U.S. baking business, before factoring in any potential benefit from the use of proceeds from the sale.

However, the company expects the net impact of the divestiture to be only slightly dilutive to its fiscal 2019 adjusted earnings per share, as foregone profit for the remainder of the fiscal year is expected to be mostly offset by an anticipated one-time gain on divestiture.

This expectation also excludes any potential benefit from the use of proceeds from the sale.

The company added that it will further discuss the transaction’s anticipated impact on its fiscal 2019 outlook when it releases its fiscal 2019 first quarter results in August.

The transaction is expected to close in the second quarter of the company’s 2019 fiscal year, subject to customary closing conditions, including receipt of required regulatory approvals.

The transaction primarily encompasses products sold in U.S. retail channels under the Pillsbury, Martha White, Hungry Jack, White Lily, and Jim Dandy brands, along with all relevant trademarks and licensing agreements, and the Company’s manufacturing facility in Toledo, Ohio.

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