J.M. Smucker Co. on April 4 announced a deal to acquire Ainsworth Pet Nutrition LLC, maker of the Rachael Ray Nutrish brand of pet foods, for $1.7 billion in cash. In the same announcement, Smucker said it's exploring strategic options for its U.S. baking business, including a potential sale.
Smucker said the acquired pet food business should contribute sales of approximately $800 million in the first full year after closing.
Ainsworth's high-end and natural lines will complement Smucker's existing pet food brands, especially Nature's Recipe. Other Smucker brands include Gravy Train, 9 Lives, Kibbles & Bits and Milk Bone. The deal comes just five weeks after General Mills unveiled an $8 billion deal to acquire the biggest remaining independent pet food company, Blue Buffalo ... and a month after Smucker had to terminate the planned purchase of the Wesson oil brand from Conagra because of an anti-competition challenge from the Federal Trade Commission.
Approximately two-thirds of Ainsworth's sales are generated by the Nutrish brand, developed by celebrity chef Rachael Ray, "which is driving significant growth in the premium pet food category," Smucker noted. Ainsworth also sells pet foods and snacks under other branded and private label trademarks.
"Pet food and pet snacks has become the largest center-of-the-store category in the U.S. food and beverage market, generating over $30 billion in annual retail sales across all channels, and remains one of the fastest-growing categories," the announcement said. "Nutrish holds a leading position and is one of the fastest-growing brands in the premium dry dog food segment within the grocery and mass channels. While Nutrish has a relatively smaller presence in premium cat food, the brand is well-positioned for significant growth in this segment."
The announcement indicated Ainsworth is partly owned by its founding Lang family and partly by L Catterton, an investment firm. Included in the sale are headquarters in Meadville, Pa., and manufacturing facilities in Meadville and Frontenac, Kan., plus a leased distribution facility in Greenville, Pa. Not included are two additional manufacturing facilities that are primarily used to provide contract manufacturing services to third-party pet food distributors. Ainsworth has some 700 employees, all of whom apparently will be offered jobs.
About the U.S. baking business: Smucker got many former General Mills/Pillsbury brands when it acquired International Multifoods in 2004. Pillsbury, Martha White, Hungry Jack, White Lily and Jim Dandy brands are included in the review, as well as a manufacturing facility in Toledo, Ohio. Not included is the Canadian baking business. The U.S. baking brands are expected to generate sales of approximately $370 million this fiscal year. The review is expected to be completed by the end of the first quarter of the company's 2019 fiscal year (this July 31).
"Our current strategic priorities include an increased emphasis and allocation of resources toward growing our coffee, pet, and snacking food businesses," said CEO Mark Smucker, who warned that a sale was not a certainty.