J.M. Smucker Co., the maker of jams and Jif peanut butter, agreed to buy a majority of Sara Lee Corp. (SLE)’s North American coffee food-service unit, almost doubling the size of its business that sells to large institutions.
The agreement calls for $350 million to be paid when the transaction closes in early 2012 and an additional $50 million to be paid in the next 10 years, Orrville, Ohio-based Smucker said today in a statement.
The purchase allows Smucker, which already sells Folgers and Dunkin’ Donuts coffees, to add the Douwe Egberts brand to its portfolio. Smucker has sought to boost net sales by 6 percent a year, with half of the growth coming from acquiring iconic brands, Co-Chief Executive Officer Richard Smucker said during a conference in September.
The transaction “aligns with our desire to compete in all forms of coffee,” he said today in the statement.
Smucker said the acquisition will add about 450 employees and liquid coffee and ground coffee manufacturing facilities in the U.S. The takeover will add about $100 million to sales in Smucker’s fiscal 2012.
In August, the foodmaker said it lowered prices by 6 percent for the majority of coffee sold in the U.S., prompting rival Kraft Foods Inc. (KFT) to also cut prices.
Sara Lee, led by Chief Executive Officer Marcel Smits, decided earlier this year to separate its beverage and bakery business from its meat operations. Ralcorp Holdings Inc. bought Sara Lee’s North American refrigerated-dough business for $545 million.
Grupo Bimbo SAB, the world’s largest breadmaker, has said it plans to buy the company’s North American fresh bakery business.
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