Smucker to acquire Ainsworth Pet Nutrition, LLC and explore strategic options for U.S. baking business
The J. M. Smucker Company has announced the signing of a definitive agreement to acquire Ainsworth Pet Nutrition, LLC in a transaction valued at approximately $1.7 billion, after an estimated tax benefit of $200 million.
The Company also announced today it will explore strategic options for its U.S. baking business, including a potential sale.
Ainsworth is a leading producer, distributor, and marketer of premium pet food and pet snacks, predominately within the United States. Approximately two-thirds of Ainsworth's sales are generated by its Rachael Ray™ Nutrish® brand, which is driving significant growth in the premium pet food category. Ainsworth also sells pet food and pet snacks under several additional branded and private label trademarks.
Pet food and pet snacks have become the largest centre-of-the-store category in the U.S. Food and Beverage market, generating over $30 billion in annual retail sales across all channels, and remains one of the fastest-growing categories. This acquisition and the addition of the high-growth Nutrish brand will increase the scale and further accelerate the growth profile of the Company's pet food business.
Nutrish holds a leading position and is one of the fastest-growing brands in the premium dry dog food segment within the grocery and mass channels, a key growth driver for the overall category. The addition of Nutrish to the Company's portfolio will significantly expand the Company's presence in this area, complementing the Company's Nature's Recipe® brand.
The transaction further strengthens the Company's position in dog snacks with the presence of Nutrish in fast-growth segments, including natural meats and long-lasting chews.
While Nutrish has a relatively smaller presence in premium cat food, the brand is well-positioned for significant growth in this segment. This will help accelerate opportunities in the Company's current pet food portfolio.
"Ainsworth Pet Nutrition is an excellent strategic fit for our Company, as the Rachael RayTM Nutrish® brand adds another high-growth, on-trend brand to our pet food portfolio," said Mark Smucker, CEO. "Their team has done a tremendous job growing this business, building Nutrish into one of the most recognizable premium pet food brands in the United States. We look forward to working with the talented Ainsworth team, as we know their passion for pets runs as deep as ours."
"Smucker's decision to acquire Ainsworth Pet Nutrition validates the power of the Ainsworth company mission," said Jeff Watters, President and CEO of Ainsworth. "At Ainsworth, our goal has been to improve the lives of pet families everywhere by making high-quality pet food accessible to all pet parents. This single-minded focus has resonated with consumers and will continue to resonate under Smucker leadership."
"After five generations, our family, in partnership with L Catterton, made the decision to sell Ainsworth Pet Nutrition to The J. M. Smucker Company," said Sean Lang, Executive Chairman of Ainsworth. "We took great care to find the right home for our brands and our people, to whom we are so grateful. The J. M. Smucker Company, also a fifth-generation family company, is led by a like-minded family to our own. We expect the combined horsepower of these pet care organizations to achieve great things."
"It has been an important goal of mine to help create pet food with the same care I use when creating my recipes, as well as a brand that has been able to donate over $27 million to help animals in need," said Rachael Ray. "So, I am pleased that The J. M. Smucker Company is committed not only to maintaining the high quality of the Nutrish brand but continuing the philanthropic efforts of the brand through donations to The Rachael Ray Foundation, which helps those animals that are less fortunate than our own."
The Company is reviewing strategic options, including a potential divestiture, for its U.S. baking business that primarily encompasses products sold in U.S. retail channels under the Pillsbury®, Martha White®, Hungry Jack®, White Lily®, and Jim Dandy® brands, along with all relevant trademarks and licensing agreements, and the Company's manufacturing facility in Toledo, Ohio. The Company holds a 20-year, perpetually renewable, royalty-free license for the use of the Pillsbury® brand name and related trademarks, which is transferable at the Company's discretion. The Company's baking business in Canada, which consists of products primarily sold under the Carnation®, Eagle Brand®, Five Roses®, Golden Temple®, and Robin Hood® brands, is excluded from this review.
The Company's U.S. baking brands are expected to generate net sales of approximately $370 million for the Company's fiscal year ending 30th April 2018 and are primarily reported in the Company's U.S. Retail Consumer Foods segment. The review is expected to be completed by the end of the first quarter of the Company's 2019 fiscal year.
"We regularly review our portfolio to ensure it aligns with our strategic priorities," said Mr Smucker. "Pillsbury®, Hungry Jack®, and Martha White® remain iconic brands, and this well-run business has been a solid contributor to our financial performance over the years. However, our current strategic priorities include an increased emphasis and allocation of resources toward growing our coffee, pet, and snacking food businesses."
There can be no assurance that the Company's exploration of strategic options will result in any transaction or other action by the Company, or the timing thereof. The Company does not intend to comment on or provide updates regarding these matters unless and until it determines that further disclosure is appropriate or required based on then-current facts and circumstances.