US food and beverage business J.M. Smucker is reportedly considering selling its baking brands.
Bloomberg, citing unnamed sources, said brands including Pillsbury – which Smucker acquired as part of its deal to buy International Multifoods Corp in 2004 – Robin Hood flour and Martha White baking mixes could be sold off in a deal worth as much as US$700m.
The newswire said a final decision to pursue a sale has not been made and Smucker may keep the unit.
Yesterday (7 March), Smucker abandoned its plan to acquire Conagra Brands’ Wesson Oil brand after the US Federal Trade Commission moved to block the deal, arguing it would reduce competition in the market.
At the Consumer Analyst Group of New York (CAGNY) conference in Florida last month the Ohio-based company said it was aiming to boost sales from its sluggish US consumer foods division through the launch of a new range of snacks.
The division is now the smallest of its three domestic businesses, behind coffee and pet food.
In the nine months to 31 January, Smucker’s US consumer food arm generated sales of $1.54bn, down from $1.61bn a year earlier.
When contacted today by just-food, a J.M. Smucker spokesperson said: “We do not comment on rumour or speculation. We are always evaluating opportunities that support our strategic priorities, grow our business and drive shareholder value.”
Analysts at Barclays Capital suggested a sale would be “sensible and strategically on-point for J.M. Smucker despite the potential for slight EPS dilution”.
In a note issued today, they wrote: “We believe J.M. Smucker’s brands broadly enjoy a number one or number two market share position in their respective categories, with baking mixes being a category where they are the number-four player, based on Nielsen category definitions.”