J.M. Smucker To Acquire Wesson Oil Brand From Conagra Brands For $285M
J. M. Smucker Company (SJM) announced the signing of a definitive agreement to acquire the Wesson oil brand from Conagra Brands (CAG). The all-cash transaction, which the company will fund primarily with debt, is valued at approximately $285M, prior to an expected tax benefit related to the acquisition with a present value of approximately $45M.
Under the terms of the Agreement, Conagra will continue to manufacture products sold under the Wesson brand and provide certain other transition services for up to one year following the close of the transaction. After the transition period, the Company expects to consolidate Wesson production into its existing oils manufacturing facility in Cincinnati, Ohio.
The company anticipates the acquisition to add annual net sales of approximately $230M. The transaction is expected to generate EBITDA of approximately $30M and contribute approximately 10c to the company's adjusted earnings per share in the first full year after closing, excluding one-time costs and before giving effect to synergies.
Annual cost synergies of approximately $20M are expected to be fully realized within two years after closing. The $285M purchase price represents a multiple of approximately 9.5 times EBITDA. Factoring in the estimated $45M tax benefit and $20M of annual synergies, the multiple is expected to be approximately 5 times EBITDA. The transaction is subject to customary closing conditions, including receipt of required regulatory approvals.
Disclosure: None.