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J.M. Smucker To Sell U.S. Baking Business To Private-equity Firm For $375 Mln

The J. M. Smucker Company (SJM) said that it agreed to sell its U.S. baking business to Brynwood Partners VII L.P. and Brynwood Partners VIII L.P., subsidiaries of Brynwood Partners, in a transaction valued at $375 million.

The transaction primarily encompasses products sold in U.S. retail channels under the Pillsbury, Martha White, Hungry Jack, White Lily, and Jim Dandy brands, along with all relevant trademarks and licensing agreements, and the Company's manufacturing facility in Toledo, Ohio. This business generated net sales of approximately $370 million for the Company's fiscal year ended April 30, 2018, which were primarily reported in its U.S. Retail Consumer Foods segment. The transaction does not include the Company's baking business in Canada.

The company expects the divestiture to be dilutive to its adjusted earnings per share by $0.25 to $0.30 on a full-year basis, reflecting foregone profit related to the U.S. baking business, before factoring in any potential benefit from the use of proceeds from the sale. However, the Company expects the net impact of the divestiture to be only slightly dilutive to its fiscal 2019 adjusted earnings per share, as foregone profit for the remainder of the fiscal year is expected to be mostly offset by an anticipated one-time gain on divestiture.

The expectation also excludes any potential benefit from the use of proceeds from the sale. The Company will further discuss the transaction's anticipated impact on its fiscal 2019 outlook when it releases its fiscal 2019 first quarter results in August.

The transaction is expected to close in the second quarter of the Company's 2019 fiscal year, subject to customary closing conditions, including receipt of required regulatory approvals.

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