Selling Shortening

 Selling Shortening

B&G Foods Pays $550 Million for Smucker’s Crisco Business

By Terry Troy

Jelly goes better with peanut butter than shortening.

One of Ohio’s largest food manufacturers, the J.M. Smucker Co., of Orville, is selling its Crisco® oils and shortening business to B&G Foods of New Jersey for $550 million, it was announced earlier this week.

The divestiture of the business aligns with Smucker’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 transaction encompasses 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 who support the Crisco business. The business generated net sales of approximately $270 million for Smucker’s fiscal year ended April 30, 2020, which were primarily reported in its U.S. Retail Consumer Foods segment. The transaction also includes the Company’s oils and shortening business outside the U.S., which is primarily in Canada.

“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 Chief Executive Officer, 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.”

“We are very excited to add the iconic Crisco brand to the B&G Foods portfolio,” added 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 number one brand of shortening, the number one 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.”

The announcement from J.M. Smucker comes on the heels of the unveiling last month of an updated corporate identity to better reflect the Company’s diverse portfolio, category expertise and multi-generational appeal.

“Given our ambitions of continued transformational growth, it is important our identity reflect the Company we’ve grown to become and the one we aspire to be,” said Smucker. “Our new identity will aid our efforts to attract additional talented professionals, reinforce our category

expertise with customers and suppliers and create greater awareness of the value we bring to our partners helping to spur new opportunities.”

During the past two decades, the Company has thoughtfully grown from an $800 million business to a more than $7 billion multi-category CPG leader but is still largely known for its namesake products, which include its jams and jellies manufactured in Ohio.

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