Julia Rivera//April 28, 2023//
Julia Rivera //April 28, 2023//
Press release: J.M. Smucker Co.
The J.M. Smucker Co. recently announced the closing of the transaction to sell several pet food brands, including the Rachael Ray Nutrish, 9Lives, Kibbles ‘n Bits, Nature’s Recipe and Gravy Train brands as well as the company’s private label pet food business to Post Holdings, Inc. The transaction value is approximately $1.2 billion, consisting of $700 million in cash, subject to a working capital adjustment, and approximately 5.39 million shares of common stock of Post Holdings, Inc.
The company previously announced the signing of a definitive agreement for the transaction on February 8, 2023. The transaction includes relevant trademarks and licenses and the company’s manufacturing and distribution facilities in Bloomsburg, Pennsylvania, as well as its manufacturing facilities in Meadville, Pennsylvania and Lawrence, Kansas. In addition, a group of employees are transitioning to Post Holdings, Inc. to support the business.
“With the close of this transaction, we are excited to continue advancing our pet strategy, which is focused on driving growth for our dog snacks and cat food brands, including Milk-Bone and Meow Mix,” said Mark Smucker, chair of the board, president and chief executive officer. “We are confident in the potential of these businesses and are well positioned to deliver continued growth.”
“In addition, on behalf of our entire organization, I want to express my sincere appreciation to the employees transitioning to Post. Their hard work, dedication to serving our consumers and passion for these brands has played an important role in the growth of our pet business.”
The divestiture is expected to be dilutive to adjusted earnings per share by approximately $0.45 on a full-year basis, reflecting the foregone profit related to the divested brands and before any benefits from the use of transaction proceeds and the impact of stranded overhead costs. The company anticipates replacing the divested earnings through share repurchases, paying down debt and mitigating the impact of stranded overhead costs through initiatives within its transformation office over time.
The company will provide further details about the transaction’s financial impact to its fiscal 2024 outlook when it reports its fourth quarter fiscal 2023 results in June.