"Big Heart Pet Brands markets some of America's best known pet brands and, with a broad product portfolio that includes the leading position in dog snacks, this acquisition is a great strategic fit," CEO Richard Smucker said.
CLEVELAND, Ohio -- The J.M. Smucker Co., the Ohio food manufacturer best known for its Smucker's preserves, Jif Peanut Butter and Folgers Coffee, has now become a big dog in the pet food aisle.
The food manufacturer announced Monday afternoon that its acquisition of Big Heart Pet Brands, based in San Francisco, has closed. Big Heart Pet Brands produces, distributes and markets pet foods and pet snack brands including: Meow Mix, Milk-Bone, Kibbles 'n Bits, 9Lives, Natural Balance Pet Foods, Pup-Peroni, Gravy Train, Nature's Recipe, Canine Carry Outs, Snausages, Meaty Bone, Pounce, Jerky Treats, Alley Cat, and Milo's Kitchen.
The cash-and-stock transaction, first disclosed on Feb. 3, and announced after the markets had closed on Monday, is valued at about $6 billion, including the $2.5 billion in net debt that Smucker paid off when the deal closed.
"With approximately two-thirds of U.S. households having at least one family pet, we will now be able to serve the mealtime and snacking needs of the whole family," Chief Executive Richard Smucker said when the deal was announced. He characterized the deal as "an excellent strategic fit for our company," saying it gives Smucker an immediate and significant presence in one of the largest and fastest growing categories in the U.S. grocery store.
This is the largest acquisition in Smucker's 115-year history. In November 2008, Smucker bought the No. 1-selling Folgers Coffee business for about $3.3 billion, and in June 2002, it bought Jif Peanut Butter and Crisco Oils and shortenings for about $1 billion. Both deals were from Procter & Gamble Co.
In between, Smucker also bought International Multifoods Corp., maker of Pillsbury frostings and baking mixes, for about $500 million in 2004.
Dave West, president and chief executive of Big Heart Pet Brands, is now president of Smucker's Big Heart Pet Food and Snacks division and has been appointed to the company's board of directors.
"Big Heart Pet Brands markets some of America's best known pet brands and, with a broad product portfolio that includes the leading position in dog snacks, this acquisition is a great strategic fit," Richard Smucker said in a written statement on Monday.
"Adding a third platform for growth, along with our existing food and beverage businesses, the transaction increases our center-of-the-store presence with consumers and retailers, while further enhancing shareholder value. We are pleased to welcome the employees of Big Heart Pet Brands into the Smucker family and look forward to working with this talented team to grow the business together."
Although some of the acquired brands had been associated with incidences of contaminated pet food in the past, Smucker said that the pet foods in question are no longer made from those ingredients.
"Consumer safety and product quality have always been of paramount
importance to our Company, and this category will be treated with the same
adherence to our stringent quality standards as our current operations," said Smucker spokeswoman Maribeth Burns. "Big Heart Pet Brands has transitioned the vast majority of its portfolio of brands away from sourcing ingredients from China."
The deal comes with Big Heart Pet Brands' corporate facilities in San Francisco, Pittsburgh, and Burbank, California; manufacturing facilities in Decatur, Alabama; Topeka, Kansas; Lawrence, Kansas; Buffalo, New York; and Bloomsburg, Pennsylvania; as well as some research and development facilities, sales offices and distribution centers.
Big Heart Pet Brands, which until Feb. 18, 2014, was called the Del Monte Corp., has nearly 2,500 employees. The company changed its name after selling off its fruit, vegetable and other consumer foods.
J.M. Smucker funded the non-stock part of the acquisition with a $1.75 billion bank term loan and $3.65 billion in long-term bonds. Proceeds from the new borrowing were used to pay off the company's $1.1 billion in private placement notes.
The Big Heart Pet Brands news was announced after the markets closed on Monday. Smucker's shares opened at $113.97 on Tuesday morning, and jumped as high as $114.96 in early-morning trading before closing at $112.62, down 77 cents from Monday's close of $113.39.