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J M Smucker to buy Big Heart Pet Brands in $5.8 billion deal

By
Reuters
Reuters
By
Reuters
Reuters
February 3, 2015, 4:37 PM ET
J.M. Smucker Company Announces Its Raising Coffee Prices By 9 Percent
SAN RAFAEL, CA - JUNE 05: Packages of Folgers coffee are displayed on a shelf at a grocery store on June 5, 2014 in San Rafael, California. Ohio-based J.M.Smucker announced that the increase in coffee bean prices due to severe drought in Brazil is prompting them to raise the price of Folgers and Dunkin' Donuts coffee by 9 percent. J.M. Smucker's fourth quarter earnings slipped 9 percent with profits of $118.5 million, or $1.16 a share, compared to$130.3 million, or $1.22 a share, one year ago. (Photo by Justin Sullivan/Getty Images)Photograph by Justin Sullivan — Getty Images

(Reuters) – J M Smucker, the maker of Folgers coffee, said it would buy pet food maker Big Heart Pet Brands, known for brands such as Meow Mix and Milk-Bone, for $3.2 billion to enter the pet food market.

Smucker said it would offer about 17.9 million shares to Big Heart’s shareholders and pay $1.3 billion in cash.

Big Heart, formerly Del Monte Corp, changed its name following the sale of its fruit, vegetable, and other consumer foods business in February last year.

San Francisco-based Big Heart is jointly owned by private equity firms Kohlberg Kravis Roberts & Co LP, Vestar Capital Partners, Centerview Capital and AlpInvest Partners Inc.

Smucker (SJM) said it would assume about $2.6 billion of net debt of Big Heart, bringing the total deal value to about $5.8 billion.

Smucker said it expects to incur about $225 million in one-time costs related to the transaction. The transaction is expected to close by April.

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