ORRVILLE, OHIO — J.M. Smucker Co. is considering a potential sale of its baking brands, which include Pillsbury, Robin Hood flour and cereal, and Martha White baking mixes, according to a March 7 report from Bloomberg.
Citing people familiar with the situation, Bloomberg said the Orrville-based company is working with an adviser to weigh its options for the unit. Reports suggest the unit could attract a purchase price of around $700 million.
Responding to the reports, Maribeth Burns, a spokesperson with Smucker, said the company does not comment on rumor or speculation.
“We are always evaluating opportunities that support our strategic priorities, grow our business and drive shareholder value,” Ms. Burns said.
Smucker acquired the baking brands as part of its 2004 acquisition of International Multifoods Corp.
Smucker net income in the third quarter ended Jan. 31 was $831.3 million, equal to $7.32 per share on the common stock, up from $139.6 million, or $1.16 per share, in the third quarter last year. Sales were $1,903.3 million, up 1.3% from $1,878.8 million in the same period last year.
Third-quarter results included a $715.3 million income tax benefit, versus a $63 million charge during the same period last year. Partly offsetting the impact of the tax windfall were impairment charges of $176.9 million in the third quarter, versus $75.7 million in the third quarter of fiscal 2017.
During a Feb. 16 conference call with analysts, Steven T. Oakland, former vice-chairman and president of U.S. Food and Beverage at Smucker, said the competitive landscape in the baking mix business has picked up.
Meanwhile, protecting profitability factored in the company’s decision-making regarding Pillsbury, said Mark Smucker, president and chief executive officer.
“(Regarding) Pillsbury, we made some conscious decisions when we see that the competitive environment is such that ... an investment in a brand might actually create a situation where profit is just too challenged,” he said. “I think that’s been sort of the case for Pillsbury this past year. We consciously chose not to go deep, if you will.
“That said, we do have some nice innovation coming out on Pillsbury in the next year. So it’s not that we’re ignoring it, and it’s not that just we are letting it stagnate, but we do have some nice innovation that will continue to support that business going forward.”
