The J.M. Smucker Co. has entered into a definitive agreement to acquire Big Heart Pet Brands in a cash and stock transaction valued at approximately $5.8 billion, which includes approximately $2.6 billion of net debt.
Big Heart Pet Brands is the largest stand-alone producer, distributor and marketer of premium-quality, branded pet food and pet snacks in the U.S. Its portfolio of brands includes Meow Mix, Milk-Bone, Kibbles ‘n Bits, 9Lives, Natural Balance, Pup-Peroni, Gravy Train, Nature’s Recipe, Canine Carry Outs and Milo’s Kitchen.
“The acquisition of Big Heart Pet Brands supports our purpose of ‘helping to bring families together to share memorable meals and moments,’ as we recognize that pets are cherished members of the family,” said Richard Smucker, CEO of Orrville, Ohio-based The J.M. Smucker Co. “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. We look forward to working with Big Heart Pet Brands’ experienced and talented team to leverage our combined capabilities and scale, while further enhancing value for all our constituents.
“Big Heart Pet Brands is an excellent strategic fit for our company and the acquisition provides many compelling benefits in both the short- and long-term,” he added. “This combination further advances our strategy of owning leading food brands in attractive center-of-the-store categories. The pet food business will become a third platform for growth for our company, along with our existing food and beverage businesses. This acquisition adds to the company’s portfolio of leading brands and increases our consumer presence, while enabling us to capitalize on the growth of the pet food and snacks category. We are pleased that Dave West will be joining our company to lead the pet food business as part of our talented management team and we look forward to his contributions.”
Big Heart Pet Brands, with nearly 2,500 employees, is headquartered in San Francisco, California. The company currently is owned by a consortium of investors led by funds affiliated with Kohlberg Kravis Roberts & Co. L.P., Vestar Capital Partners, Centerview Capital and AlpInvest Partners Inc. The company changed its name from Del Monte Corp. to Big Heart Pet Brands following the sale of its fruit, vegetable and other consumer foods portfolio in early 2014.
The acquisition provides the Smucker’s greater scale and strategic balance to its current portfolio while positioning it for continued growth, according to a news release. Strategic benefits are expected to include the following:
• Acquiring Big Heart Pet Brands will provide the company with an immediate and significant presence in the $21 billion pet food and snacks category, one of the largest and fastest growing center-of-the-store categories in the U.S.;
• Big Heart Pet Brands holds the No. 1 position in pet snacks and a strong presence in the pet specialty channel, both representing key growth drivers for the overall category; and
• The acquisition is consistent with the company’s strategy of owning leading food brands in attractive center-of-the-store categories, with a focus on North America.
The transaction is expected to close by the end of the company’s current fiscal year, which ends on April 30, 2015, and subject to customary closing conditions, including receipt of required regulatory approvals.