Deal of the Week: Smucker to Buy for $5.8B

Announcement Date  February 3, 2015 Acquirer  The J. M. Smucker Company (NYSE: SJM) Acquirer Description  Manufactures and markets branded food products worldwide. Operates through three segments: U.S. Retail ; U.S. Retail Consumer Foods; and International, Foodservice, and Natural Foods  Founded in 1897 and headquartered in Orrville, Ohio Acquirer Financial  Mkt Cap: $11.5 billion  LTM EBITDA: $1.2 billion Statistics  EV: $13.7 billion  LTM EV / Revenue: 2.5x  LTM Revenue: $5.5 billion  LTM EV / EBITDA: 11.6x Target Company  Big Heart Pet Brands Target Description  Largest U.S. standalone producer, distributor and marketer of premium quality, branded and pet snacks  Headquartered in , CA and currently owned by a consortium of investors led by funds affiliated with KKR, Vestar Capital and Centerview Capital Price / Consideration  Price: $5.8 billion  Consideration: Cash and stock Acquirer Advisor  William Blair & Company Target Advisor  Morgan Stanley & Co. and Centerview Partners Rationale  The deal, Smucker’s biggest ever, will add brands like Milk‐Bone, Kibbles ’n Bits and to a stable that already includes Smucker’s jelly, peanut butter and coffee  Adding Big Heart will add $2.2 billion in sales and the top maker of pet snacks. It could also provide a shot in the arm to help revive Smucker’s sales, which have been relatively flat since 2012  Smucker expects to reap about $200 million in annual cost savings within the first three years after the takeover closes. It also anticipates its pro forma earnings per diluted share to rise by about 10% in its 2017 and 2018 fiscal years Deal Points  Smucker’s will buy Big Heart Pet Brands, the pet food company once known as Del Monte, from its private equity owners for about $5.8 billion, including debt  Under the terms of the transaction, Smucker will give to Big Heart’s owners 18 million newly issued shares and $1.3 billion in cash. It will also assume $2.6 billion in debt  At the deal price, the private equity firms will have made roughly double their investment in the company Of Note  Big Heart Pet Brands changed its name from Del Monte Corporation following the divestiture of its Consumer Products business and namesake Del Monte brand on February 18, 2014. On March 8, 2011, was acquired and taken private by KKR, Vestar and Centerview

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