B&G Foods announced that it has entered into an agreement to acquire the iconic Crisco brand of oils and shortening from The J.M. Smucker Co. for approximately $550 million in cash, subject to a post-closing inventory adjustment. As part of the acquisition, B&G Foods is also acquiring a manufacturing facility and warehouse in Cincinnati, Ohio.
In a statement, Mark Smucker, President and Chief Executive Officer of J.M. Smucker Co., explained that the divestiture of the Crisco business aligns with the Company’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 snacks.
B&G Foods expects the acquisition to close during the fourth quarter of 2020, subject to customary closing conditions, including the receipt of regulatory approvals.
“We are very excited to add the iconic Crisco brand to the B&G Foods portfolio,” stated 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.”
According to J.M. Smucker, Crisco generated net sales of approximately $270 million for the company’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.
B&G Foods projects that in 2021, the acquired business will continue to benefit from increased demand due to the COVID-19 pandemic and generate annual net sales of approximately $270 million, adjusted EBITDA in the range of $65 million to $70 million and adjusted diluted earnings per share in the range of $0.45 to $0.50.
Because the acquisition will be structured as an asset purchase, B&G Foods expects to realize approximately $75 million in tax benefits on a net present value basis. At the midpoint of B&G Foods’ 2021 projected adjusted EBITDA for the business, the acquisition represents a purchase price multiple of approximately 8.1 times adjusted EBITDA (or 7.0 times adjusted EBITDA net of expected tax benefits).
B&G Foods intends to fund the acquisition and related fees and expenses with cash on hand and revolving loans under its existing credit facility.
Based in Parsippany, New Jersey, B&G Foods and its subsidiaries manufacture, sell and distribute high-quality, branded shelf-stable and frozen foods across the United States, Canada and Puerto Rico.