ORRVILLE, OHIO — The J.M. Smucker Co. announced its intent to acquire the North American food service coffee and hot beverage business of Sara Lee Corp. The transaction is for $350 million at closing plus $50 million over the next 10 years, and is expected to close at the beginning of calendar-year 2012.
“This transaction further strengthens our position as a leading North American coffee company,” said Richard Smucker, chief executive officer. “The addition of liquid coffee concentrate to the Smucker portfolio aligns with our desire to compete in all forms of coffee, adding to our roast and ground, single-serve, instant and ready-to-drink platforms. The innovation partnership further allows us to collaborate on new technologies in the liquid coffee category for the food service market.”
The transaction includes the liquid coffee concentrate business sold under the Douwe Egberts brand along with various roast and ground coffee, cappuccino, tea and cocoa products sold in food service. Smucker also will license the Cafitesse and Pickwick brands. The companies also agreed to work together on liquid coffee technology by entering a long-term food service innovation partnership.
The transaction will add 450 employees to Smucker as well as a liquid coffee manufacturing facility in Virginia, a leased roast and ground coffee manufacturing facility in Louisiana, and coffee equipment and service teams throughout North America. Overall, the acquisition is expected to add annual net sales of about $285 million for J.M. Smucker.
“In recent years, our North American coffee business has been food service-based and largely unbranded, which is a challenge in a highly competitive marketplace,” said Jan Bennink, executive chairman of the board for Sara Lee. “Our decision to sell a major part of this business to Smucker is an example of Sara Lee Coffee and Tea’s renewed focus on sustainable, profitable growth and part of our mandate to create the strongest possible pure-play company.
“Smucker, which owns leading U.S. coffee brand Folgers, and Sara Lee have also entered into a licensing agreement to cooperatively develop liquid coffee technologies to drive long-term growth. We look forward to working with Smucker and to the promising future of our new pure-play coffee and tea company.”