Axios Pro Exclusive Content

J.M. Smucker sells some pet food brands to Post Holdings

Feb 9, 2023
Caption: Rachael Ray at a celebration for her pet food brand, Nutrish. Photo: Cindy Ord/Getty Images for Nutrish

Rachael Ray at a celebration for her pet food brand, Nutrish. Photo: Cindy Ord/Getty Images for Nutrish

J.M. Smucker plans to sell several pet food brands to Post Holdings in a cash-and-stock deal valued at around $1.2 billion.

Why it matters: The deal gives Post an entryway into the thriving pet food market, with U.S. consumers spending over $123 billion on their pets in 2021, according to SDR Ventures.

  • That market size is fueling a flurry of activity, with CPG and health care companies, and private equity firms all taking an interest.

Details: The deal between the two CPG giants will consist of $700 million in cash and about 5.39 million shares of Post stock.

  • The deal includes Smucker’s Rachael Ray Nutrish, 9Lives, Kibbles 'n Bits, Nature’s Recipe and Gravy Train brands, as well as its private-label pet food business. It will still retain its Milk-Bone and Meow Mix businesses.
  • The transaction is expected later this year and is projected to be dilutive to Smucker’s adjusted EPS by 45 cents on a full-year basis.

What they’re saying: “The acquisition will provide Post with a compelling entry point into the attractive and growing pet food category,” the company said in a statement.

  • Post, which owns brands such as Weetabix and Bob Evans Farms, will create a new pet food platform within its Post consumer brands segment, which will be led by unit president Nicolas Catoggio.

State of play: With a slow economy, pet sales can play an important role in propping up companies that might otherwise be vulnerable to a pullback in consumer spending and will also feed their need to find new markets, Axios’ Nathan Bomey wrote in July.

The big picture: Large corporate conglomerates have been taking a fine-tooth comb through their portfolios in the past few years in a bid to simplify their businesses.

  • In December, Oreo parent Mondelēz said it will sell its gum business in developed markets to Perfetti Van Melle Group, a European gum and confectionery maker.
  • Smucker itself has been pruning its portfolio for the last several years, offloading its baking products, its juice and grains business, and its private-label dry pet food brand.

Meanwhile, last year, in the pet food space, Mars acquired direct-to-consumer pet food brand Nom Nom Now for a reported $1 billion and Canada-based Champion Petfoods in November.

  • Swedencare snagged U.S.-based pet supplement maker NaturVet for $448 million.
Go deeper