In a significant business move, JM Smucker has successfully sold its Cloverhill and Big Texas brands to the U.S.-based JTM Foods for an estimated $40 million.
In addition to the well-known Cloverhill pastries and Big Texas cinnamon rolls, the transaction also encompasses several private-label products along with a manufacturing facility situated in Chicago.
The deal involves the transfer of nearly 400 employees associated with these brands to JTM Foods, a statement issued by JM Smucker confirmed.
Dan O’Leary, general manager of JM Smucker’s sweet baked snacks and pet-food operations, emphasized the strategic importance of this divestiture. He stated, “This divestiture reflects our continued commitment to portfolio optimization to prioritize resources to support the execution of our sweet baked snacks strategy, focused on growing the Hostess brand, and advancing our leadership in the sweet baked goods category.”
He further elaborated, “This decision continues the ongoing work to ensure our manufacturing network is optimized to mitigate costs and reduce complexity.”
This move is part of JM Smucker’s broader strategy. In November, the company divested its Voortman cookies brand to Second Nature Brands, a snacks maker in the U.S., in an all-cash transaction valued at $305 million. Such actions signify JM Smucker’s intent to streamline its operations and concentrate on core competencies.
Just three months earlier, JM Smucker announced plans to cut 79 jobs within its Hostess Brands division, the snacks business that the company acquired in a substantial $5.6 billion deal in 2023. The Cloverhill and Big Texas brands were both acquired as part of this strategic purchase from ARYZTA in 2018.
JTM Foods, located in Pennsylvania, produces a variety of sweet baked goods that are marketed under its own brands as well as private labels for retailers. Additionally, the company offers co-manufacturing services, showcasing its adaptability and production capabilities in the food sector.
According to JM Smucker, the assets being sold to JTM generated nearly $30 million in net sales for the fiscal year ending April 30, 2024. Furthermore, JM Smucker anticipates that these assets will produce annual net sales of approximately $60 million for the 2025 fiscal year.
The company plans to strategically utilize the proceeds from this transaction to decrease its overall debt. Importantly, JM Smucker expects that the sale will have an “immaterial” impact on its adjusted earnings per share, reflecting a careful and calculated financial maneuver.
