The J.M. Smucker Co. announced Feb. 3 that it 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 company estimates Big Heart Pet Brands' net sales will be approximately $2.3 billion for its fiscal year ending May 3.
Big Heart Pet Brands, with nearly 2,500 employees, is headquartered in San Francisco, Cal. The company is currently owned by a consortium of investors led by funds affiliated with Kohlberg Kravis Roberts & Co. L.P. (KKR), 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 on Feb. 18, 2014.
"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," said Richard Smucker, chief executive officer. "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."
Under the terms of the agreement, Smucker's will acquire all of the outstanding equity of Big Heart Pet Brands. Smucker's will issue approximately 17.9 million shares of its common stock to the shareholders of Big Heart Pet Brands' holding company and pay $1.3 billion in cash, subject to adjustment for working capital and certain other amounts. It will also assume approximately $2.6 billion of net debt of Big Heart Pet Brands, which will be refinanced by the company upon closing.
The transaction includes leased corporate facilities in San Francisco, Pittsburgh, Pa., and Burbank, Cal., and owned or leased manufacturing facilities in Decatur, Ala.; Topeka, Kan.; Lawrence, Kan.; Buffalo, N.Y., and Bloomsburg, Pa., as well as several research and development facilities, sales offices and distribution centers.