PARSIPPANY, NJ. — B&G Foods, Inc. has agreed to acquire the Crisco oils and shortening business from The J.M. Smucker Co., Orrville, Ohio, in a cash transaction valued at approximately $550 million, subject to a post-closing inventory adjustment.
The transaction includes oils and shortening products sold under the Crisco brand, certain trademarks and licensing agreements, dedicated manufacturing and warehouse facilities located in Cincinnati, and approximately 160 employees. The business generated net sales of approximately $270 million in the fiscal year ended April 30.
B&G Foods projects continued increased demand for Crisco oils as consumers continue to cook and bake more at home due to the pandemic. The acquisition is expected to be immediately accretive to B&G Foods’ earnings per share and free cash flow.
“We are very excited to add the iconic Crisco brand to the B&G Foods portfolio,” said Kenneth G. Romanzi, president and chief executive officer of B&G Foods. “Crisco is an excellent complement to our existing portfolio of brands, including our Clabber Girl and other baking powder brands. This acquisition is consistent with our longstanding acquisition strategy of targeting well-established brands with defensible market positions and strong cash flow at reasonable purchase price multiples. Crisco has a strong heritage, as the original all‑vegetable shortening that transformed the way people bake and cook over 100 years ago. Crisco is the No. 1 brand of shortening, the No. 1 brand of vegetable oil and also holds a leadership position in other cooking oils and cooking sprays.”
The divestiture aligns with J.M. Smucker’s previously stated intent to exit the US baking category and focus more on pet food, coffee and snacking. Two years ago, the company sold its Pillsbury, Martha White, Hungry Jack, White Lily and Jim Dandy baking mix and flour brands to private equity firm Brynwood Partners for $375 million.
“Crisco is an iconic brand that is beloved by consumers, and the business has been a solid contributor to our financial performance,” said Mark Smucker, president and CEO of The J.M. Smucker Co. “However, our strategic priorities include an increased focus and allocation of resources toward pet food and pet snacks, coffee, and snacking to maintain momentum in these categories. Today’s announcement helps position the company to further grow our core businesses and unlock value for our shareholders.”
The transaction is expected to close in the fourth quarter of 2020, subject to the satisfaction of customary closing conditions, including the receipt of regulatory approvals.
B&G Foods expects the business to generate annual net sales of approximately $270 million, adjusted EBITDA of $65 million to $70 million and adjusted diluted earnings per share of 45¢ to 50¢ in 2021. The company expects to realize approximately $75 million in tax benefits on a net present value basis because the deal is structured as an asset purchase.
J.M. Smucker Co. expects the divestiture to be dilutive to its adjusted earnings per share by 45¢ to 55¢ on a full-year basis prior to factoring in any potential benefit from the use of proceeds from the sale.