J M Smucker to buy Meow Mix owner in pet food push

Tue Feb 3, 2015 7:30pm EST
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By Amrutha Gayathri

(Reuters) - J M Smucker Co (SJM.N: Quote) has agreed to buy Big Heart Pet Brands for $3.2 billion, snapping up the popular Meow Mix and Milk-Bone brands in its first venture into the fast-growing U.S. pet food market.

Smucker, known for its peanut butter, jam and Folgers coffee, is betting on rising pet ownership in the United States, a trend that has already attracted interest from investors and encouraged companies to sell up or go public.

More U.S. households have pets than children, according to the American Pet Products Association. About 39 percent of the estimated $59 billion in pet-related spending was on food last year, according to its website. (bit.ly/1lCH45j)

"With approximately two-thirds of U.S. households having at least one family pet, we will now be able to serve the mealtime and snacking needs of the whole family," Chief Executive Richard Smucker said in a statement.

Smucker said it would offer about 17.9 million shares to shareholders of Big Heart, formerly Del Monte Corp, and pay $1.3 billion in cash.

Big Heart is owned by private equity firms Kohlberg Kravis Roberts & Co LP, Vestar Capital Partners, Centerview Capital and AlpInvest Partners Inc. Together, they will own about 14 percent of Smucker after the deal.

Smucker will also assume about $2.6 billion of Big Heart's net debt, bringing the total deal value to about $5.8 billion. Smucker expects to be leveraged four times after the transaction closes by April.

Shares of Smucker rose 3.2 percent to $109.35 in extended trading.   Continued...

J.M. Smucker CEO Richard Smucker walks off the sixth green during the second round of the Pebble Beach National Pro-Am golf tournament at the Monterey Peninsula Country Club in Pebble Beach, California, February 7, 2014. REUTERS/Michael Fiala