Smucker plans to finance Big Heart acquisition with term loan, bonds

By Angela McDaniels

Tacoma, Wash., Feb. 3 – J.M. Smucker Co. plans to fund the non-equity portion of its acquisition of Big Heart Pet Brands, Inc. with a term loan and long-term public bonds, according to a company news release.

Smucker agreed to acquire Big Heart in a cash-and-stock transaction valued at about $5.8 billion. Smucker will issue about 17.9 million shares of common stock, pay $1.3 billion of cash and assume about $2.6 billion of net debt, which will be refinanced upon closing.

The company expects the combined pro forma debt at closing to be about $6.5 billion and its pro forma leverage ratio to be about four times, but Smucker said it is “committed to maintaining an investment-grade credit rating” and will prioritize deleveraging over the next three to five years.

Big Heart is currently owned by a consortium of investors led by funds affiliated with Kohlberg Kravis Roberts & Co. LP, Vestar Capital Partners, Centerview Capital and AlpInvest Partners Inc.

Orrville, Ohio-based Smucker makes fruit spreads, coffee, peanut butter, shortening and oils, ice cream toppings, sweetened condensed milk and other foods products.

San Francisco-based Big Heart Pet Brands makes pet food and pet snacks. The company changed its name from Del Monte Corp. following the sale of its fruit, vegetable and other consumer foods portfolio in February 2014.

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