J. M. Smucker (NYSE: SJM) said on Wednesday it would acquire pet food and pet snacks maker Ainsworth Pet Nutrition in an all-cash transaction for about $1.7 billion to strengthen its pet food portfolio in an fast-growing pet food market.
J. M. Smucker also said it plans to explore options for its U.S. baking business, including a sale.
The baking business, which includes brands like Pillsbury and Martha White, is expected to generate net sales of about $370 million this fiscal year
The deal comes nearly a month after rival General Mills (NYSE: GIS) said in February it would buy Blue Buffalo Pet Products for about $8 billion.
The pet food and pet snacks market generates over $30 billion in annual retail sales in the United States, J. M. Smucker said.
The company said it expects annual cost synergies of $55 million within first three years and net sales of about $800 million in the first full year, following the deal.
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.
This acquisition and the addition of the high-growth Nutrish brand will increase the scale and further accelerate the growth profile of the Company's pet food business.
Smucker's stock price gathered 32 cents to $124.02 in early Thursday trading
