J.M. Smucker's Strategic Divestment: Voortman Cookie Brand Sold for $305 Million
Tuesday, Oct 22, 2024 11:00 am ET
1min read The J.M. Smucker Co. (NYSE: SJM) has announced a significant strategic move, agreeing to sell its Voortman cookie brand to U.S.-based premium snacks maker Second Nature Brands. The all-cash transaction is valued at approximately $305 million, subject to a working capital adjustment. This decision reflects the company's commitment to optimizing its portfolio and reallocating resources to its core growth brands.
The divestment of the Voortman brand includes all trademarks and the company's leased manufacturing facility in Burlington, Ontario, Canada. Approximately 300 employees will transition with the business. Mark Smucker, Chair of the Board, President, and Chief Executive Officer, stated, "The divestiture of the Voortman brand is an important step in our integration plans that will enable the execution of our Sweet Baked Snacks strategy through dedicated focus and ongoing investments in the Hostess brand, advancing our leadership in the sweet baked goods category."
The Voortman brand generated net sales of approximately $65 million for the company's fiscal year ended April 30, 2024, representing a partial year of net sales reported in its Sweet Baked Snacks segment results following its acquisition on November 7, 2023. For fiscal year 2025, the company anticipates full-year net sales from the Voortman brand to be approximately $150 million.
The company expects the divestiture to be dilutive to its adjusted earnings per share by approximately $0.25 on a full-year basis, reflecting the foregone profit related to the Voortman brand. However, the company anticipates using the net proceeds from the transaction to pay down debt, which will contribute an earnings per share benefit of approximately $0.10 on a full-year basis.
The transaction is anticipated to close in the third quarter of the company's current fiscal year ending April 30, 2025, subject to customary closing conditions including the receipt of required regulatory approvals. Goldman Sachs & Co., LLC is serving as the company's financial advisor, and Blake, Cassels & Graydon LLP is serving as the company's legal advisor in connection with the transaction.
The divestment of the Voortman brand allows J.M. Smucker to focus on its core growth brands, such as Hostess and Cafe Bustelo, and sharpen its competitive position in the sweet baked snacks category. By reallocating resources to these brands, the company aims to drive future growth and strengthen its market position.
The divestment of the Voortman brand includes all trademarks and the company's leased manufacturing facility in Burlington, Ontario, Canada. Approximately 300 employees will transition with the business. Mark Smucker, Chair of the Board, President, and Chief Executive Officer, stated, "The divestiture of the Voortman brand is an important step in our integration plans that will enable the execution of our Sweet Baked Snacks strategy through dedicated focus and ongoing investments in the Hostess brand, advancing our leadership in the sweet baked goods category."
The Voortman brand generated net sales of approximately $65 million for the company's fiscal year ended April 30, 2024, representing a partial year of net sales reported in its Sweet Baked Snacks segment results following its acquisition on November 7, 2023. For fiscal year 2025, the company anticipates full-year net sales from the Voortman brand to be approximately $150 million.
The company expects the divestiture to be dilutive to its adjusted earnings per share by approximately $0.25 on a full-year basis, reflecting the foregone profit related to the Voortman brand. However, the company anticipates using the net proceeds from the transaction to pay down debt, which will contribute an earnings per share benefit of approximately $0.10 on a full-year basis.
The transaction is anticipated to close in the third quarter of the company's current fiscal year ending April 30, 2025, subject to customary closing conditions including the receipt of required regulatory approvals. Goldman Sachs & Co., LLC is serving as the company's financial advisor, and Blake, Cassels & Graydon LLP is serving as the company's legal advisor in connection with the transaction.
The divestment of the Voortman brand allows J.M. Smucker to focus on its core growth brands, such as Hostess and Cafe Bustelo, and sharpen its competitive position in the sweet baked snacks category. By reallocating resources to these brands, the company aims to drive future growth and strengthen its market position.
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