ST. LOUIS — Post Holdings, Inc. is acquiring several pet food brands and manufacturing assets from The J.M. Smucker Co. for approximately $1.2 billion. The acquisition will give Post Holdings a compelling entry point into the growing pet food category, according to the company.

Brands to be acquired include Rachael Ray Nutrish, Nature’s Recipe, 9Lives, Kibbles ‘n Bits and Gravy Train. Combined the brands generated sales of $1.5 billion in the year ended April 30, 2022, according to The J.M. Smucker Co.

During an Investor Day presentation on Dec. 14, 2022, Tucker Marshall, chief financial officer of The J.M. Smucker Co., told investors the company’s pet snacks category made up 33% of total sales in fiscal 2022, while cat food represented 32% of sales and dog food accounted for 31%. Marshall added the company intends to take its pet snacks business to $1 billion in sales and beyond, with its Milk-Bone brand leading the pack.

“We have a market-leading position with 23% dollar share in the dog snack category and over 60% of dog-owning households treat with at least one of our brands,” Marshall told investors. “…We want to continue our premium innovation launches as well as enter new subcategories… I’m very confident in our path to $1 billion.”

The divestiture does not include The J.M. Smucker Co.’s Meow Mix brand, which has driven strong growth over 19 of the last 20 consecutive quarters and is No. 1 in the dry cat food market, according to the company.

Once the acquisition is completed, Post Holdings plans to create a new pet food platform within Post Consumer Brands. Nicolas Catoggio will continue in his role as president and chief executive officer of Post Consumer Brands and will see his responsibilities expand to include management of North American ready-to-eat cereal and peanut butter, as well as the new pet food business.

The J.M. Smucker Co. shared a handful of its employees will transition to new roles at Post Holdings to support the company’s new pet food business. Manufacturing assets to be included in the deal are processing plants in Lawrence, Kan., and Meadville, Pa., and distribution facilities in Bloomsburg, Pa.

Robert Vitale, president and CEO of Post Holdings. (Source: Post Holdings, Inc.)Robert Vitale, president and CEO of Post Holdings. (Source: Post Holdings, Inc.) 

“We expect this acquisition to continue our history of creating value with a buy-and-build approach to categories,” said Robert V. Vitale, president and CEO of Post Holdings. “These iconic brands are ideally suited to this strategy.”

Post Holdings’ management expects the acquisition to contribute approximately $100 million in adjusted EBITDA in the 12 months following the close of the acquisition and before the realization of cost synergies, which the company expects to be $30 million annually by the third full fiscal year post closing, resulting from benefits of scale across logistics, procurement and administrative services.

“This divestiture supports our strategy to prioritize investments and resources in the areas of our business that offer the strongest growth and profit potential,” said Mark Smucker, president and CEO of The J.M. Smucker Co. “In our pet business this is reflected in our focus on dog snacks and cat food, anchored by our Milk-Bone and Meow Mix brands, respectively.

“Portfolio optimization and strategic resource allocation remain key drivers of our long-term growth, Smucker added “The execution of this proven strategy has helped us streamline our business, improve margin mix, and position the company to deliver continued shareholder value.”

The transaction, subject to closing conditions, is expected to be completed in the second quarter of calendar year 2023. 

The divestiture comes on the heels of two others by The J.M. Smucker Co. over the last two years. In December 2021, the company sold its private label dry pet food business to Diamond Pet Foods, a transaction valued at approximately $33 million. In February 2021, the company sold its Natural Balance brand to Nexus Capital Management for roughly $50 million.

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