J.M. Smucker to divest Natural Balance business to Nexus in roughly $50M deal

The J.M. Smucker Co. announced it has entered into a definitive agreement to sell its Natural Balance premium pet food business to Nexus Capital Management LP, in a cash transaction valued at approximately $50M, subject to a working capital adjustment and before a one-time cash tax benefit to be realized on the sale. The transaction encompasses pet food products sold under the Natural Balance brand, certain trademarks and licensing agreements, and select employees who support the Natural Balance business. The business generated net sales of approximately $220M for the company's fiscal year ended April 30, 2020, which were reported in its U.S. Retail Pet Foods segment. The company expects the divestiture to be dilutive to its adjusted earnings per share in the range of 5c-10c on a full-year basis, reflecting the foregone profit related to the Natural Balance business, before factoring in any potential benefit from the use of proceeds from the sale. The company will discuss the transaction's impact on its fiscal year 2021 outlook when it releases its third quarter results in February 2021 and anticipates the earnings impact will be immaterial. The transaction is expected to close in the third quarter of the company's 2021 fiscal year, subject to customary closing conditions.