The J.M. Smucker Co. has reached an agreement to divest its Cloverhill and Big Texas brands, as well as certain private label products, to Ohio-based JTM Foods LLC.
The all-cash transaction is valued at about $40 million, subject to a working capital adjustment, and includes relevant trademarks and licenses and the company’s manufacturing facility in Chicago. About 400 employees also will transition with the business.
“This divestiture reflects our continued commitment to portfolio optimization to prioritize resources to support the execution of our sweet baked snacks strategy, focused on growing the Hostess brand, and advancing our leadership in the sweet baked goods category,” said Dan O’Leary, SVP and general manager of sweet baked snacks and pet.
“This decision continues the ongoing work to ensure our manufacturing network is optimized to mitigate costs and reduce complexity.”
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The divested value brands and private label products generated net sales of about $30 million for the company’s fiscal year ended April 30, 2024, which represents a partial year of net sales reported in its sweet baked snacks segment results following its acquisition on Nov. 7, 2023. For fiscal year 2025, the company anticipates full-year net sales from the divested value brands and private label products to be about $60 million.
The J.M. Smucker Co. expects the divestiture to be immaterial to its adjusted earnings per share on a full-year basis. It anticipates using the net proceeds from the transaction to pay down debt. The company will provide additional information about the transaction’s impact, which is expected to be immaterial to its fiscal year 2025 outlook, when it releases its third quarter results.
The transaction is anticipated to close in the fourth quarter of the company’s current fiscal year, ending April 30.
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