The J.M. Smucker Co. (NYSE: SJM) has entered into a definitive agreement to sell its natural and organic beverage and grains businesses to Nexus Capital Management LP in a cash transaction valued at approximately $110 million. The sale includes R.W. Knudsen® and TruRoots® assets and trademarks, and a licensing agreement for Santa Cruz Organic® beverages. The transaction also includes the Company's manufacturing and distribution facilities in Chico, California, and Havre de Grace, Maryland. It does not include Santa Cruz Organic® nut butters, fruit spreads, syrups or applesauce. In a related decision, to further optimize operations for the Consumer Foods business, the Company plans to close and pursue the sale of its Ripon, Wisconsin, production facility in calendar year 2022 and consolidate production at its Orrville, Ohio, facility.
Collectively, the natural beverage and grains businesses generated net sales of approximately $140 million for the Company's fiscal year ended April 30, 2021, which were primarily reported in its U.S. Retail Consumer Foods segment.
"This transaction supports our strategy to direct investments and resources toward core brands positioned for growth," said Tina Floyd, Sr. Vice President and General Manager, Consumer Foods, The J.M. Smucker Co. "By focusing resources on our core brands, including Uncrustables® sandwiches, Jif® and Smuckers®, we are positioning ourselves to build on our market leadership while continuing to support the growth of the overall category."
Last month, the Company announced plans to build its third manufacturing facility and distribution center dedicated to production of Smucker's® Uncrustables® sandwiches. With increased production capacity and continued consumer demand, the Company plans to grow the brand over the next five years to approximately $1 billion in annual net sales.
The Company expects the divestiture to be dilutive to its adjusted earnings per share by approximately $0.15 on a full-year basis, reflecting the foregone profit related to the natural and organic beverages and grains businesses, before factoring in any potential benefit from the use of net proceeds from the sale. The Company will further discuss the transaction's impact on its fiscal year 2022 outlook when it releases its third quarter results.
The transaction is expected to close in the third quarter of the Company's 2022 fiscal year, subject to customary closing conditions. The Company appointed Goldman Sachs & Co. LLC as exclusive financial advisor and Benesch, Friedlander, Coplan & Aronoff LLP as legal advisor to assist with the sale of the beverage and grains businesses.