Procter & Gamble begins exchange offer in merger of Folgers with Smucker

By Jennifer Chiou

New York, Oct. 8 - Procter & Gamble Co. announced the start of an exchange offer for its common stock in connection with the previously announced merger of its Folgers Coffee Co. subsidiary with J.M. Smucker Co.

In the exchange offer, Procter & Gamble shareholders have the option to exchange some, none or all of their shares for shares of Folgers common stock. Following the merger, each share of Folgers common stock will automatically convert into the right to receive one Smucker common share.

The Smucker common shares issued in the Folgers merger are expected to represent 53.5% of the Smucker common shares that will be outstanding after the merger.

The offer is designed to permit Procter & Gamble shareholders to exchange their shares for shares of Folgers common stock at a 12% discount, subject to a limit of 1.7213 shares of Folgers common stock per share of Procter & Gamble stock.

The company said it will determine the prices at which the shares will be exchanged by calculating the average of the volume-weighted average prices of shares of both companies during the three consecutive trading days ending on and including the second trading day preceding the last day of the exchange offer. The exchange ratio will be announced no later than Nov. 4.

The offer will end on Nov. 5 at midnight ET, immediately followed by the closing of the merger of Folgers and Smucker.

The transactions are subject to customary closing conditions, including Smucker shareholder approval and a minimum tender condition.

Procter & Gamble said it expects that 63.1 million shares of Folgers common stock will be offered in exchange for shares of Procter & Gamble common stock.

On Sept. 15, Smucker announced a special $5 dividend per common share payable on Oct. 31 to all shareholders of record at the close of business on Sept. 30.

On June 4, Procter & Gamble, a Cincinnati branded consumer goods company, said it would merge its Folgers coffee business into Smucker in an all-stock reverse Morris Trust transaction valued at about $3.3 billion, including $350 million of Folgers' debt.

Smucker shareholders will vote on the issuance of Smucker shares in connection with the proposed merger at a special meeting Oct. 16.

The transaction is expected to close in the fourth quarter of 2008, Smucker previously said.

Morgan Stanley & Co. Inc. is the dealer manager for the exchange offer.

Smucker manufactures fruit spreads, peanut butter, shortening and oils, ice cream toppings, sweetened condensed milk and health and natural foods beverages in North America. The company is based in Orrville, Ohio.

Mentioned in this article:

J.M. Smucker Co. NYSE: SJM

Procter & Gamble Co. NYSE: PG

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