The J.M. Smucker Co. Completes the Divestiture of Fermented Condiment Brands in Canada to TreeHouse Foods

Rhea-AI Summary

The J.M. Smucker Co. (NYSE: SJM) has closed the sale of its Bick's® pickles, Habitant® pickled beets, Woodman's® horseradish, and McLarens® pickled onions brands to TreeHouse Foods, Inc. (NYSE: THS) for approximately $20 million USD. The divestiture is expected to have an immaterial impact on the company's adjusted earnings per share for the full year.

Financial Analyst

The divestiture of select brands by The J.M. Smucker Co. to TreeHouse Foods represents a strategic portfolio realignment. The transaction's modest valuation at approximately $20 million, relative to Smucker's market cap and annual revenue, supports the company's statement of an immaterial impact on adjusted earnings per share (EPS). It's important to note that while the immediate financial impact might be negligible, this move could indicate a shift towards optimizing the company's core brand portfolio, potentially improving long-term operational efficiency and profit margins. Investors should monitor whether the capital from this sale is allocated towards debt reduction, share repurchases, or reinvestment into higher-growth areas.

Market Research Analyst

In the context of the food and beverage industry, divestitures like this can be a sign of a company's intent to focus on higher-margin or faster-growing segments. By shedding non-core brands, Smucker may be looking to streamline its operations and concentrate on brands that have stronger market positions or align better with consumer trends. This could enhance competitive advantage and brand equity over time. However, the removal of these brands from Smucker's portfolio may also open opportunities for competitors, particularly in the niche markets that Bick's®, Habitant®, Woodman's® and McLarens® occupy. TreeHouse Foods' acquisition could strengthen its own portfolio and market presence, which is something stakeholders should consider.

Mergers & Acquisitions Legal Expert

From a legal standpoint, the closing of this transaction between The J.M. Smucker Co. and TreeHouse Foods is a routine example of industry consolidation. The all-cash nature of the deal simplifies the transaction structure and avoids complications that might arise from stock-based compensation. The mention of a working capital adjustment is typical in such deals to account for changes in inventory, receivables and payables that occur between the signing and closing dates. It is crucial for investors to review subsequent regulatory filings that will detail how this adjustment was calculated and the final transaction terms, as these can provide insights into the financial health and operational performance of the divested brands.

ORRVILLE, Ohio, Jan. 2, 2024 /PRNewswire/ -- The J.M. Smucker Co. (NYSE: SJM) announced today the closing of the transaction to sell its Bick's^® pickles, Habitant^® pickled beets, Woodman's^® horseradish and McLarens^® pickled onions brands to TreeHouse Foods, Inc. (NYSE: THS). The all-cash transaction is valued at approximately $20 million USD, subject to a working capital adjustment. 

The Company previously announced the signing of a definitive agreement for the transaction on October 17, 2023.

The Company expects the impact of the divestiture to be immaterial to its adjusted earnings per share on a full-year basis. The Company will provide additional information about the transaction's impact on its fiscal year 2024 outlook during the next quarterly earnings call.

The J.M. Smucker Co. Forward Looking Statements
This press release ("Release") includes certain forward-looking statements within the meaning of U.S. federal securities laws. The forward-looking statements may include statements concerning our current expectations, estimates, assumptions and beliefs concerning future events, conditions, plans and strategies that are not historical fact. Any statement that is not historical in nature is a forward-looking statement and may be identified by the use of words and phrases such as "expect," "anticipate," "believe," "intend," "will," "plan," "strive" and similar phrases. Federal securities laws provide a safe harbour for forward-looking statements to encourage companies to provide prospective information. We are providing this cautionary statement in connection with the safe harbor provisions. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made, when evaluating the information presented in this Release, as such statements are by nature subject to risks, uncertainties and other factors, many of which are outside of our control and could cause actual results to differ materially from such statements and from our historical results and experience. These risks and uncertainties include, but are not limited to, the following: uncertainties related to the timing of the consummation of the sale of the Bick's^®, Habitant^®, Woodman's^® and McLarens^® brands to TreeHouse Foods, Inc. (the "Transaction"); the possibility that any or all of the conditions to the consummation of the Transaction may not be satisfied or waived; and risks described under "Risk Factors" in reports and statements filed by the Company with the U.S. Securities and Exchange Commission. We do not undertake any obligation to update or revise these forward-looking statements to reflect new events or circumstances. 

About The J. M. Smucker Co. 
At The J.M. Smucker Co., it is our privilege to make food people and pets love by offering a diverse family of brands available across North America. We are proud to lead in the coffee, peanut butter, fruit spreads, frozen handheld, sweet baked goods, dog snacks and cat food categories by offering brands consumers trust for themselves and their families each day including Folgers^®, Dunkin'^®, Café Bustelo^®, Jif^®, Smucker's^® Uncrustables^®, Smucker's^®, Hostess^®, Voortman^®, Milk-Bone^® and Meow Mix^®. Through our unwavering commitment to producing high quality products, operating responsibly and ethically and delivering on our Purpose, we will continue to grow our business while making a positive impact on society. For more information, please visit jmsmucker.com.

The J. M. Smucker Co. is the owner of all trademarks referenced herein, except for Dunkin'^®, which is a trademark of DD IP Holder LLC. The Dunkin'^® brand is licensed to The J.M. Smucker Co. for packaged coffee products sold in retail channels, such as grocery stores, mass merchandisers, club stores, e-commerce and drug stores, as well as in certain away from home channels. This information does not pertain to products for sale in Dunkin'^® restaurants.

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SOURCE The J.M. Smucker Co.

FAQ

What brands did The J.M. Smucker Co. (NYSE: SJM) sell to TreeHouse Foods, Inc. (NYSE: THS)?

The J.M. Smucker Co. (NYSE: SJM) sold its Bick's® pickles, Habitant® pickled beets, Woodman's® horseradish, and McLarens® pickled onions brands to TreeHouse Foods, Inc. (NYSE: THS).

What was the value of the transaction between The J.M. Smucker Co. (NYSE: SJM) and TreeHouse Foods, Inc. (NYSE: THS)?

The all-cash transaction was valued at approximately $20 million USD, subject to a working capital adjustment.

What is the expected impact of the divestiture on The J.M. Smucker Co.'s (NYSE: SJM) adjusted earnings per share?

The divestiture is expected to have an immaterial impact on The J.M. Smucker Co.'s (NYSE: SJM) adjusted earnings per share for the full year.