The Orrville, Ohio-based J.M. Smucker Co. has announced the closing of the transaction to sell its Crisco oils and shortening business to B&G Foods Inc. for $550 million, subject to a working capital adjustment. The company previously announced the signing of a definitive agreement to divest its Crisco business on Oct. 26.
The transaction encompasses oils and shortening products sold under the Crisco brand primarily in the U.S. and Canada, certain trademarks and licensing agreements, dedicated manufacturing and warehouse facilities located in Cincinnati, Ohio, and approximately 160 employees who support the Crisco business.
The business generated net sales of approximately $270 million for the company’s fiscal year ended April 30. The divestiture of the Crisco business aligns with the company’s 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.
The J.M. Smucker Co. updated its full-year fiscal 2021 guidance to reflect the impact of the divested business. The outbreak of COVID-19 continues to impact financial results and cause uncertainty of the full-year fiscal 2021 outlook. Changes in consumer purchasing behavior, retailer inventory levels, macroeconomic conditions and any manufacturing or supply chain disruption could materially impact actual results. This guidance reflects expectations based on the company’s current performance and understanding of the overall environment.
Updated guidance reflects the removal of divested net sales for the remainder of fiscal 2021 of approximately $100 million and removal of adjusted earnings per share of $0.20 as compared to previous guidance, excluding any potential benefit from the use of proceeds from the sale. Full-year fiscal 2021 net sales growth is now expected to range from flat to 1 percent and adjusted earnings per share is expected to range from $8.35 to $8.65. The company anticipates offsetting the earnings dilution and using the after-tax proceeds for share repurchases, over time. The company maintains its free cash flow guidance range of $975 million to $1,025 million.
