B&G Foods, the US-based manufacturer, has entered an agreement to acquire the Crisco cooking oil and bakery shortening brand and an associated manufacturing facility from domestic peer J.M. Smucker.
The deal, which includes a factory and warehouse in Cincinnati, Ohio, has been struck for around US$550m and is expected to close during the current quarter subject to regulatory approvals. The 160 staff at the plant will be transferred over to the new owner.
B&G Foods, the owner of brands including Green Giant frozen vegetables and Baker’s Joy non-stick baking spray, projects the Crisco business will generate sales next year of about $270m amid elevated demand driven by the Covid-19 pandemic as more people eat at home, and EBITDA profits of $65-70m. Adjusted earnings per share are seen in a range of 45 to 50 US cents.
The deal represents a purchase price multiple of approximately 8.1 times adjusted EBITDA, or “seven times adjusted EBITDA net of expected tax benefits”, according to B&G, which is also present in bakery products, soups and sauces, condiments, meals, snacks and spreads.
Crisco’s product line-up includes vegetable shortening, vegetable oil and other cooking oils, and sprays.
Kenneth Romanzi, B&G’s president and CEO, said: “Crisco is an excellent complement to our existing portfolio of brands, including our Clabber Girl and other baking powder brands. This acquisition is consistent with our long-standing acquisition strategy of targeting well-established brands with defensible market positions and strong cash flow at reasonable purchase price multiples.”
Earlier this year, B&G also acquired Massachusetts-based vegan manufacturer Farmwise Foods. In May 2019, the company purchased ingredients manufacturer Clabber Girl.
J.M. Smucker, meanwhile, said it is disposing of the Crisco oil brand as part of a broader strategy to exit the US baking category and “focus more of its resources on its core growth platforms of pet food, coffee, and snacking”.
Crisco had sales of around $270m in its fiscal year ended in April, primarily generated through retail customers, J.M. Smucker said, adding the deal also includes its oils and shortening business outside the US, mainly in Canada. In the 12 months to 30 April, J.M. Smucker’s net sales were $7.8bn, up 1% on an underlying basis year-on-year.
President and CEO Mark Smucker said: “Crisco is an iconic brand that is beloved by consumers, and the business has been a solid contributor to our financial performance. However, our strategic priorities include an increased focus and allocation of resources toward pet food and pet snacks, coffee, and snacking to maintain momentum in these categories.”
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