ORRVILLE, OHIO — The J. M. Smucker Co. has acquired the coffee brands and business operations of Rowland Coffee Roasters, Inc., Miami, for $360 million. The transaction includes a manufacturing, distribution and office facility in Miami.
Privately-owned Rowland Coffee sells products under the Hispanic Cafe Bustelo and Cafe Pilon brands, and the company distributes to retail and food service channels concentrated in the northeastern United States and southern Florida. Rowland Coffee had sales of more than $110 million in 2010.
“This acquisition strengthens and broadens the breadth of our leadership in the U.S. retail coffee category,” said Richard Smucker, executive chairman and co-chief executive officer for J.M. Smucker, which owns the Folgers brand and is the licensee for Dunkin’ Donuts brand packaged coffee sold in retail channels such as grocery stores, mass merchandisers, club stores and drug stores. “The addition of the Cafe Bustelo and Cafe Pilon coffee brands, each with a rich heritage, provides us with a unique opportunity to establish a strong presence in coffee with Hispanic consumers in the U.S.”
Vince Byrd, president and chief operating officer for J.M. Smucker, said the addition of Rowland Coffee “is an exciting bolt-on transaction and a good strategic fit” for J.M. Smucker. He added the acquisition is expected to be accretive in fiscal 2012 and provides the company’s coffee business with greater scale and reach.
The transaction is expected to contribute approximately 5c per diluted common share to fiscal 2012 earnings, excluding one-time costs of the transaction, J.M. Smucker said. The company intends to leverage its existing coffee infrastructure to expand distribution and marketing support of the acquired brands. Manufacturing operations are expected to be consolidated into J.M. Smucker’s existing coffee facilities in New Orleans in approximately three years. The consolidation of operations is expected to achieve additional cost savings of approximately 10c per diluted common share in the first full year after completion of consolidation, excluding one-time costs.
J.M. Smucker said one-time costs related to the acquisition are estimated to total $25 million to $30 million, including approximately $15 million of noncash charges associated with closing the Miami facilities. Approximately $10 million of the one-time costs are expected to be incurred in fiscal 2012, with the remaining incurred through 2014.