The J.M. Smucker Company (Smucker's) has announced that it will acquire Big Heart Pet Brands for US$5.8 billion, including US$2.6 billion of net debt. The purchase marks Smucker's entrance into the petfood and snacks category and expands its overall presence in consumer packaged goods.
"The acquisition of Big Heart Pet Brands supports our purpose of 'helping to bring families together to share memorable meals and moments', as we recognize that pets are cherished members of the family," said Richard Smucker, CEO. "With approximately two-thirds of US households having at least one family pet, we will now be able to serve the mealtime and snacking needs of the whole family. We look forward to working with Big Heart Pet Brands' experienced and talented team to leverage our combined capabilities and scale, while further enhancing value for all our constituents."
The acquisition will provide Smucker's greater scale and strategic balance to its current portfolio while positioning it for continued growth, according to the company. Brands Smucker's will acquire include Meow Mix, Milk-Bone, Kibbles 'n Bits, 9Lives, Natural Balance, Pup-Peroni, Gravy Train, Nature's Recipe, Canine Carry Outs and Milo's Kitchen.
"Big Heart Pet Brands is an excellent strategic fit for our company and the acquisition provides many compelling benefits in both the short- and long-term," said Smucker. "This combination further advances our strategy of owning leading food brands in attractive center-of-the-store categories. The petfood business will become a third platform for growth for our company, along with our existing food and beverage businesses. This acquisition adds to the company's portfolio of leading brands and increases our consumer presence, while enabling us to capitalize on the growth of the petfood and snacks category."
Under the terms of the agreement, Smucker's will acquire all of the outstanding equity of Big Heart Pet Brands. The company will issue approximately 17.9 million shares of its common stock to the shareholders of Big Heart Pet Brands' holding company and pay US$1.3 billion in cash, subject to adjustment for working capital and certain other amounts. The company will also assume approximately US$2.6 billion of net debt of Big Heart Pet Brands, which will be refinanced by Smucker's upon closing.
The transaction includes leased corporate facilities in San Francisco, California; Pittsburgh, Pennsylvania; and Burbank, California; and owned or leased manufacturing facilities in Decatur, Alabama; Topeka, Kansas; Lawrence, Kansas; Buffalo, New York; and Bloomsburg, Pennsylvania; as well as several research and development facilities, sales offices and distribution centers.
The transaction is expected to close by the end of Smucker's current fiscal year, which ends on April 30, 2015, subject to customary closing conditions including receipt of required regulatory approvals.