|J.M. Smucker Announces Stock Deal with P&G for Jif and Crisco|
| ORRVILLE, Ohio and CINCINNATI, Ohio, October 10 - The J.M. Smucker Company (NYSE: SJM) and The Procter & Gamble Company (NYSE: PG) today announced a definitive agreement to merge the Jif peanut butter and Crisco cooking oils businesses into The J.M. Smucker Company in an all-stock transaction. |
Prior to completion, the Jif and Crisco brands and the associated assets will be spun off from the existing P&G Company and then immediately merged with The J.M. Smucker Company. Procter & Gamble shareholders will receive one share of new J.M. Smucker stock for every 50 shares they hold in Procter & Gamble in a tax-free transaction. Based on Smucker's closing stock price of $25.89 on October 9, 2001, this represents a pre-tax equivalent cash price of $1.0 billion or approximately 1.7 times net sales.
With successful closing of the transaction, Smucker expects its sales to approximately double, to $1.3 billion. For fiscal 2003, the first full year of integration, Smucker projects net earnings before one time costs associated with the transaction to be in the range of $95-105 million, almost three times current levels. This includes a provision for increased marketing support focused on the Jif and Crisco brands.
Additionally, the Smucker Company said it expects the combined earnings power of the three brands to allow it both to continue its historic strong dividend practice, typically in the range of 40 to 50 percent of earnings, and to pursue new product development and acquisition opportunities while maintaining its investment grade rating profile.
For P&G, the transaction is expected to be slightly dilutive in fiscal 2002, but the company is comfortable with the current range of estimates. Dilution in fiscal 2003 is estimated at 6 cents per share. However, with the potential accretive impact of the pending Clairol transaction, P&G still expects to achieve its earnings goal of double-digit growth in 2003.
"Not only is this transaction very accretive to earnings, it provides significant cash flows when coupled with our already strong balance sheet," said Richard Smucker, Smucker President and Co-CEO. "Just as important, it will strengthen our position to acquire other complementary leading food brands, providing opportunity for greater top- and bottom-line growth and clearly enhancing shareholder value."
"Jif and Crisco are strong U.S. brands but they're no longer a strategic fit for P&G as we focus on building our big brands in core categories," said A.G. Lafley, President and CEO of Procter & Gamble. "At Smucker they will continue to enjoy a prominent position in another one of America's most admired companies, with an over 100-year proven track record of quality brand management."
According to Mr. Lafley, "This structure builds shareholder value very efficiently - a spin off of Jif and Crisco assets directly to our shareholders, and the opportunity for them to participate in the future growth of the new J.M. Smucker Company."
"Both these brands are an outstanding fit for Smucker," said Timothy Smucker. "Crisco is very profitable and our singular focus on food will accrue to Crisco's benefit, and provide us an enabling platform leading to new categories and enhancing vertical integration."
"Combining Jif and Smucker's," Richard Smucker explained, "brings number one brands together in the original, All-American comfort food - peanut butter and jelly. Jif also offers a broad and exciting menu of possibilities for product development and growth."
"In addition to the brands being market leaders, our companies possess similar management and employee cultures, common focus on customers, dedication to the highest standards of quality for consumers, and commitment to continually enhancing shareholder value. That is why both Richard and I, along with our entire board and management team, are so enthusiastic about this deal," Timothy Smucker concluded.
Following the completion of the transaction, the expanded company will include the Jif and Crisco manufacturing plants in Lexington, Kentucky, and Cincinnati, Ohio, respectively, in addition to the existing Smucker facilities. Smucker will offer employment to all employees at these facilities 100% dedicated to these businesses.
Conference Call Details:
The conference call will be webcast on Wednesday, October 10, 2001 at 8:45 a.m. (ET). You may receive the web cast by going to:
We suggest you check in at least ten minutes in advance of the start time to complete the brief registration process and ensure you are set up to receive the web cast.
The J.M. Smucker Company:
The Procter & Gamble Company:
The J.M. Smucker Company Forward Looking Information:
The Procter & Gamble Company Forward Looking Information:
Securities Law Legends:
The J. M. Smucker Company and its directors and executive officers may be deemed to be participants in the solicitation of proxies from The J. M. Smucker Company's shareholders. A list of the names of those directors and executive officers and descriptions of their interests in The J. M. Smucker Company is contained in The J. M. Smucker Company's proxy statement dated July 10, 2001, which is filed with the Commission. Shareholders may obtain additional information about the interest of the directors and executive officers in this transaction by reading the proxy statement-prospectus when it becomes available.