Food manufacturer continues consolidation
By Terry Troy
The J.M. Smucker Co. is selling its natural and organic beverage and grains business to Nexus Capital Management LP in a cash transaction valued at $110 million. Nexus is an alternative asset investment management company based in Los Angeles, CA that was founded in 2013.
The sale includes R.W. Knudsen® and TruRoots®assets and trademarks, and a licensing agreement for Santa Cruz Organic® beverages. The transaction also includes the Company’s manufacturing and distribution facilities in Chico, CA, and Havre de Grace, MD. It does not include Santa Cruz Organic® nut butters, fruit spreads, syrups or applesauce.
In a related decision, to further optimize operations for the Consumer Foods business, the Company plans to close and pursue the sale of its Ripon, WI, production facility in calendar year 2022 and consolidate production at its Orrville, OH, facility
“This transaction supports our strategy to direct investments and resources toward core brands positioned for growth,” said Tina Floyd, Sr. Vice President and General Manager, Consumer Foods, The J.M. Smucker Co. “By focusing resources on our core brands, including Uncrustables® sandwiches, Jif® and Smuckers®, we are positioning ourselves to build on our market leadership while continuing to support the growth of the overall category.”
The announcement of this latest transaction comes on the heels of Smuckers earlier decision to sell its private label dry pet food business, including its manufacturing facility in Frontenac, KS to Diamond Pet Foods in a cash transaction valued at approximately $33 million. The transaction did not include any branded products or the Company’s private label wet pet food business. That business generated net sales of approximately $95 million for the fiscal year ended April 30, 2021.
Last month, the Company also announced plans to build its third manufacturing facility and distribution center dedicated to production of Smucker’s® Uncrustables® sandwiches. With increased production capacity and continued consumer demand, the Company plans to grow the brand over the next five years to approximately $1 billion in annual net sales.
The Company expects the recent divestiture to be dilutive to its adjusted earnings per share by approximately $0.15 on a full-year basis, reflecting the foregone profit related to the natural and organic beverages and grains businesses, before factoring in any potential benefit from the use of net proceeds from the sale.
The transaction is expected to close in the third quarter of the Company’s 2022 fiscal year, subject to customary closing conditions.
The Company appointed Goldman Sachs & Co. LLC as exclusive financial advisor and Benesch, Friedlander, Coplan & Aronoff LLP as legal advisor to assist with the sale of the beverage and grains businesses.
In business for more than 120 years and five generations of family leadership, the J.M. Smucker Company’s brands are found in 90 percent of America’s homes.