Dive Brief:
- The J.M. Smucker Co. announced it will divest its U.S. canned milk brands and operations to Eagle Family Foods Group LLC, a subsidiary of funds affiliated with Kelso & Company.
- "The transaction includes canned milk products that are primarily sold in U.S. retail and foodservice channels under the Eagle Brand and Magnolia brands, along with other branded and private label trade names, with annual net sales of approximately $200 million," as well as manufacturing facilities in El Paso, TX, and Seneca, MO, according to a news release
- Completion of the transaction is expected for the end of this year.
Dive Insight:
Smucker's net sales for U.S. retail consumer foods was flat in its first fiscal quarter 2016 at $582.2 million, and segment profit saw a slight drop of 1% to $117.5 million. Lower commodity costs, including milk, which is experiencing a significant surplus, were offset by lower net price realization and higher manufacturing overhead costs associated with Smucker's new Memphis, TN, peanut butter plant.
Lower milk prices hasn't been enough of an incentive for Smucker, however, which is looking for growth in other segments, including its acquisition of Big Heart Pet Brands earlier this year, which contributed to a 47% increase in net sales for the quarter.