J.M. SMUCKER Co, the maker of Smucker's jams and Jif peanut butter, will purchase Procter & Gamble Co's Folgers coffee unit for about US$3 billion in a transaction that will double its sales.
Smucker will pay for Folgers with stock, giving P&G shareholders 53.5 percent of the combined company. The Ohio-based jam maker will also issue a US$5-a-share dividend before the purchase, the companies said yesterday. Smucker will assume US$350 million of Folgers debt, reported Bloomberg News.
The acquisition of Folgers, the top-selling United States coffee brand, will be Smucker's seventh in two years and will boost its annual sales to US$4.7 billion from US$2.15 billion last year.
P&G, the world's largest consumer-products company, is shedding the 150-year-old coffee line to focus on its faster-growing Tide detergent and Gillette razor brands.
Smucker declined 74 cents, or 1.4 percent, to US$53.01 at 8:23am yesterday before the start of New York Stock Exchange composite trading.