* Says business outside “strategic direction and scope”
* Shares fall 1.3 pct (Adds details, quote, shares)
Nov 3 (Reuters) - J. M. Smucker Co, known for its Folgers coffee and Jif peanut butter, said it would sell its U.S. canned milk business to private equity firm Kelso & Co for an undisclosed sum.
Smucker acquired the business, Eagle Family Foods Co, in 2007 for $248 million, including debt.
The business sells branded and private label sweetened condensed and evaporated milk under labels such as Eagle and Magnolia. The business accounted for $200 million in annual net sales.
“Although Eagle Brand fits nicely within our strategy and vision of owning and marketing leading brands, the larger part of the business is private label, which is outside of our strategic direction and scope,” Smucker said on Tuesday.
The deal does not include Smucker’s canned milk business in Canada and is expected to close by the end of 2015.
Smucker said manufacturing facilities in El Paso, Texas, and Seneca, Missouri, would be included in the transaction.
The deal comes amid an industry wide drop in milk sales in the United States despite low prices.
Rising domestic supply in China and Russia’s ban on importing U.S. dairy products have weighed on prices since last year.
Smucker’s shares were down 1.3 percent at $115.90 in morning trading, in line with a 1 percent fall in the broader consumer staples index. (Reporting by Sruthi Ramakrishnan and Siddharth Cavale in Bengaluru; Editing by Savio D’Souza and Sriraj Kalluvila)