J. M. Smucker (NYSE:SJM) announced the signing of a definitive agreement to acquire a majority of the North American foodservice coffee and hot beverage business of Sara Lee (SLE), a leading international coffee and tea company. The acquisition includes Sara Lee's market-leading liquid coffee concentrate business sold under the licensed Douwe Egberts brand, along with a variety of roast and ground coffee, cappuccino, tea, and cocoa products, sold through foodservice channels in North America. Liquid coffee concentrate adds a unique, high quality, and technology driven form of coffee to the company's existing foodservice product offering. In addition, the companies agreed to collaborate on liquid coffee technology by entering into a long-term foodservice innovation partnership. The acquisition is expected to add annual net sales of approximately $285M to the company. Terms of the deal call for $350M to be paid at time of closing, with an additional $50M paid in declining installments over the next ten years. The company anticipates completing the all cash transaction near the beginning of calendar 2012. Based on the anticipated closing date, the transaction is expected to contribute approximately $100M to net sales in FY12, and is not expected to have a material impact on EPS, excluding one-time costs of the transaction. One-time costs are estimated to total approximately $25M, nearly all of which are cash related. Approximately one-third of these one-time costs are expected to be incurred in FY12, with the remaining incurred through FY15.
- Sara Lee