Conagra Brands has agreed to sell the Wesson oil brand to J.M. Smucker for $285 million in another move to simplify its portfolio as it focuses on higher-margin products.
According to the Omaha World-Herald, the sale is a continuation of Conagra’s reformation under CEO Sean Connolly, who was hired in 2015 just before New York hedge fund Jana Partners took a large stake in the company and began agitating for changes it said would raise the share price.
“We continue to reshape our portfolio and focus our resources on priorities that support Conagra’s business strategy and drive value creation for shareholders,” Connolly said Tuesday in a news release announcing the sale. “We believe The J.M. Smucker Company will be a terrific steward of the Wesson brand.”
Smucker, which is based in Orrville, Ohio, already owns the Crisco oil brand, in addition to Folgers coffee, jams and jellies, Jif peanut butter and other products.
“The addition of Wesson creates a strong complement to our Crisco brand,” CEO Mark Smucker said. “By allowing us to more efficiently use existing supply chain and go-to-market resources, this acquisition will lead to significant cost savings that can further fuel growth and innovation opportunities across the company.”
Smucker anticipates the acquisition will add annual net sales of approximately $230 million and annual cost synergies of approximately $20 million are expected to be fully realized within two years after closing.
Under the terms of the deal, Conagra will continue to manufacture products sold under the Wesson brand for up to one year following closing, with Smucker then moving production to its facility in Cincinnati.
Conagra makes grocery store staples such as Hunt’s tomato sauce, Hebrew national hot dogs, and Peter Pan peanut butter. Since 2015, it has spun off its frozen French fry business into a separate firm, moved its headquarters to Chicago, and focused on newer offerings with a fresher image and higher profit margins, such as the Frontera portfolio of Mexican sauces.
In trading Tuesday, Conagra stock was down 1.3% at $38.52, while Smucker shares fell 0.3% to $127.72.