Smucker to acquire Eagle Foods for $248 million

June 20, 2007

The J. M. Smucker Company announced it has a definitive agreement to acquire Eagle Family Foods Holdings, Inc., a privately held company headquartered in Columbus, Ohio, for approximately $133 million in cash and the assumption of $115 million in debt, in a transaction valued at approximately $248 million.

Eagle is the largest producer of sweetened condensed and evaporated milk in the U.S. and Canada, with sales primarily to retail and foodservice channels. Eagle generated $206 million in sales during their 2006 fiscal year ended July 1, 2006. In addition to Eagle Brand, the company also markets other branded products including Magnolia sweetened condensed milk, None Such mincemeat, Borden EggNog, and Kava acid-neutralized coffee.

"We are pleased to acquire Eagle and expand our position in the baking aisle," commented Tim Smucker, chairman and co-CEO. "Acquisitions are an important part of our growth strategy - to own and market leading North American food brands sold in the center of the store - and Eagle complements that strategy. The addition of Eagle Brand, the leader in the sweetened condensed milk category, increases our prominence in the baking aisle alongside the Crisco, Pillsbury, Martha White, White Lily and PET brands in the U.S. and the Crisco, Robin Hood and Five Roses brands in Canada, and provides additional opportunities for cross marketing and promotion."

Craig Steinke, president and CEO of Eagle Family Foods, commented, "We are very pleased that Eagle Family Foods is joining the Smucker organization. We have the utmost respect for Smucker, and we are confident that they will maintain the integrity of Eagle's enduring brands and superior food products and build upon the tremendous achievements of our employees."

Future Opportunities

As the market's leading producer of sweetened condensed and evaporated milk, Smucker will be in the unique position to work with its customers to develop the category. The company intends to increase marketing support for the brand, highlighting the category. The acquisition will also support the company's initiatives aimed at the fast-growing Latino market, where the Magnolia brand of sweetened condensed milk is a leading brand. The foodservice channel offers additional opportunities for growth.

The company expects to continue to improve the operating costs of Eagle. Over the last two years, Eagle has restructured its operations and currently manufactures its products in two facilities located in Seneca, Missouri, and El Paso, Texas. Although these efforts have significantly improved profitability, there remain additional opportunities to realize the full potential of supply chain efficiencies. Smucker also expects to leverage its distribution network, reducing costs and adding to future synergies.

The company intends to transition the Eagle headquarters' functions to Orrville, Ohio, by the end of fiscal 2008, realizing additional savings of approximately $9 million. Direct marketing spending against the Eagle brands will be increased, but there will be some efficiencies realized by marketing the acquired brands with the existing Smucker brands.

"We expect the acquisition of Eagle to be modestly accretive in fiscal 2008, and add approximately $0.15 to earnings per diluted share in fiscal 2009," added Richard Smucker, president and co-CEO. "We look forward to adding Eagle Brand to the Smucker family of brands and taking advantage of the opportunities to enhance our top-and bottom-line."

Details of Transaction

Smucker will acquire Eagle for $133 million in cash, and the assumption of $115 million in debt, subject to certain adjustments. The company intends to finance the acquisition and repayment of assumed debt with a combination of cash balances and debt financing. The transaction is subject to customary closing conditions and is expected to close May 1, 2007.

In addition to Eagle Brand, the Company will acquire a perpetual, exclusive and royalty-free license to use the Borden and Elsie trademarks on certain products.

Smucker expects to incur approximately $3 to $4 million in merger and integration related costs. These costs include system integration, site closing costs, and employee-related expenses. The majority of these costs are expected to be charged to earnings over the next 12 months

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