ORRVILLE, Ohio, USA – The J.M. Smucker Co. announced yesterday it has entered into a definitive agreement to sell several pet food brands to Post Holdings, Inc., a consumer-packaged goods holding company headquartered in St. Louis, Missouri. The transaction is valued at approximately $1.2 billion, consisting of $700 million in cash and approximately 5.39 million shares of common stock of Post Holdings, Inc.
The transaction includes 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. 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 will transition to Post Holdings, Inc. to support the business. The Company expects these brands to generate net sales of approximately $1.5 billion for the fiscal year ended April 30, 2023, which are primarily reported in the U.S. Retail Pet Foods segment.
“This divestiture supports our strategy to prioritize investments and resources in the areas of our business that offer the strongest growth and profit potential. In our pet business this is reflected in our focus on dog snacks and cat food, anchored by our Milk-Bone and Meow Mix brands, respectively,” said Mark Smucker, Chair of the Board, President and Chief Executive Officer of the The J.M. Smucker Co.
“Portfolio optimization and strategic resource allocation remain key drivers of our long-term growth. The execution of this proven strategy has helped us streamline our business, improve margin mix, and position the Company to deliver continued shareholder value.”
The Company expects the divestiture to be dilutive to its adjusted earnings per share by approximately $0.45 on a full-year basis, reflecting the foregone profit related to the divested brands and before factoring in any benefits from the use of transaction proceeds and the impact of stranded overhead costs. The Company anticipates replacing the divested earnings through the deployment of transaction proceeds and mitigating the impact of stranded overhead costs through initiatives within its Transformation Office over time.
The transaction is anticipated to close in the fourth quarter of the Company’s current fiscal year ending April 30, 2023, subject to closing conditions including the receipt of required regulatory approvals. Goldman Sachs & Co., LLC is serving as the Company’s financial advisor and Wachtell, Lipton, Rosen & Katz is serving as the Company’s legal advisor in connection with the transaction.
The Company will discuss the transaction further during its prepared remarks at the Consumer Analyst Group of New York conference on Feb. 22, 2023 at 1:00 p.m. EST and when it releases its third quarter fiscal 2023 financial results on Feb. 28, 2023. The live webcasts and replays for both events can be accessed at the Company’s website: investors.jmsmucker.com.
