B&G Foods has entered into an agreement to acquire the Crisco brand of oils and shortening from The J.M. Smucker Co. for approximately $550 million in cash, subject to a post-closing inventory adjustment. As part of the acquisition, B&G Foods is also acquiring a manufacturing facility and warehouse in Cincinnati, Ohio. B&G Foods expects the acquisition to close during the fourth quarter of 2020, subject to customary closing conditions, including the receipt of regulatory approvals. 
“We are very excited to add the iconic Crisco brand to the B&G Foods portfolio,” stated Kenneth G. Romanzi, president and CEO of Parsippany, New Jersey-based 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.
“Consistent with our acquisition strategy, we expect the acquisition to be immediately accretive to our earnings per share and free cash flow,” Romanzi added.
B&G Foods projects that in 2021, the acquired business will continue to benefit from increased demand due to the COVID-19 pandemic and generate annual net sales of approximately $270 million, adjusted EBITDA in the range of $65 million to $70 million and adjusted diluted earnings per share in the range of $0.45 to $0.50. Because the acquisition will be structured as an asset purchase, B&G Foods expects to realize approximately $75 million in tax benefits on a net present value basis. At the midpoint of B&G Foods’ 2021 projected adjusted EBITDA for the business, the acquisition represents a purchase price multiple of approximately 8.1 times adjusted EBITDA (or 7.0 times adjusted EBITDA net of expected tax benefits).
B&G Foods intends to fund the acquisition and related fees and expenses with cash on hand and revolving loans under its existing credit facility.
The J.M. Smucker Co. says the divestiture of the Crisco business aligns with its previously stated intent to exit the U.S. baking category and focus more of its resources on its core growth platforms of pet food, coffee and snacking.
“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. “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 company expects the divestiture to be dilutive to its adjusted earnings per share in the range of $0.45 to $0.55 on a full-year basis, reflecting the foregone profit related to the oils and shortening business, before factoring in any potential benefit from the use of proceeds from the sale. The company will further discuss the transaction’s impact on its fiscal year 2021 outlook when it releases its second quarter results in November.
The J.M. Smucker Co. is based in Orrville, Ohio.
