The J.M. Smucker Company (NYSE:SJM), the large American food conglomerate which makes jams, juices, and peanut butter among other things, is ramping up its pet food business by acquiring Ainsworth Pet Nutrition in an all-cash US$1.7bln deal.
The company, which already owns pet brands like Pup-Peroni, Gravy Train and Meow Mix, might be going into the pet business in a big way, but it is getting out of the baking business.
The group said it is exploring options for its U.S. baking business, including a potential sale of Pillsbury.
The principal reason for Smucker’s push into pet food is that the market for pet snacks now generates more than US$30bn in yearly retail sales.
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Two-thirds of Ainsworth’s sales are provided by its Rachael Ray “Nutrish” brand and by adding the group to its repertoire, J.M. Smucker hopes the acquired business will contribute net sales of roughly US$800mln in the first full year after the transaction closes in early May.
“Ainsworth Pet Nutrition is an excellent strategic fit for our company, as the Rachael Ray Nutrish brand adds another high-growth, on-trend brand to our pet food portfolio,” said Mark Smucker, chief executive officer of J.M. Smucker.
The all-cash transaction, which J.M. Smucker will fund with debt, is worth US$1.9bln before a tax-benefit of US$200mln. J.M. Smucker expects to take on about US$50mln in one-time costs related to the transaction.
Shares in J.M. Smucker were flat in morning trade Thursday at US$123.76.