Buyer found for Smucker's foodservice business
for its US foodservice and bakery products businesses, plus its
Canadian Gourmet Baker operations.
The firm announced it had agreed to sell these parts of the company - acquired as part of the Multifoods acquisition - to Value Creation Partners of Columbus, Ohio for around $43 million.
The foodservice and bakery products businesses include of the manufacturing, marketing and distribution of baking mixes, frozen baked goods such as muffins, cakes, doughs, as well as frostings, to restaurants, retail and wholesale bakers, and other commercial customers in the US and Canada.
The company expects the transaction to close by the middle of February 2005.
Smucker had announced last December that it planned to sell its industrial bakery ingredients and dairy ingredients businesses during the next twelve months.
The firm noted that its decision to sell its US industrial business, discontinue operations at its Salinas, California, facility and restructure its US distribution operations, was based on the need to optimize production and lower its costs.
"The company's strategy is to own and market leading North American icon food brands sold in the center of the store. The US industrial business is not branded and thus does not fit within our strategy," spokeswoman Kim Baker told FoodNavigatorUSA.com.
Smucker said in a statement that it had worked over the past two years to improve its business margins by exiting low margin contracts in excess of $50 million, but has nonetheless decided it is necessary to sell its industrial business.
The company does not believe that these actions will have an important effect on the business and noted in a statement that industrial sales planned for 2005 are around $60 million.
The food firm announced, moreover, that it would close its plant in Salinas, California and redistribute the production to factories in Orrville, Ohio, and Memphis, Tennessee by the end of 2005.
"While these are difficult decisions, we believe they are important in positioning the company for future growth," said Tim Smucker, the CEO. As a result of the announced actions, the company expects restructuring charges of approximately $15 million, of which an estimated $6 million will be recorded in the current fiscal year and the remainder in fiscal 2006.
JM Smucker is perhaps best known for its fruit spreads, peanut butter, shortening and oils, ice cream toppings, and health and natural foods and sold under the brands of Smucker's, Jif and Crisco. Since June 2004, Pillsbury baking mixes and frostings, Hungry Jack pancake mixes, syrups and potato side dishes and Martha White baking mixes and ingredients have been part of the company.
