(Bloomberg) -- Private equity firm Brynwood Partners has agreed to buy J.M. Smucker Co.’s U.S. baking unit in a deal valued at $375 million, acquiring a struggling business that includes the Pillsbury Doughboy brand.
The deal comes as Smucker reshapes its portfolio, with an emphasis on revitalizing its coffee business and boosting sales of its pet food brands. The baking business generates about $370 million in annual sales. Bloomberg News reported in March that the company was considering a sale of the baking brands, which also include Martha White and Robin Hood.
The company expects the sale to cut as much as 30 cents from its adjusted earnings per share on a full-year basis, it said in a statement. It said the profit made from the sale of the business will mostly offset the EPS loss.
Smucker bought Pillsbury, the well-recognized baking mix brand represented in ads by the giggling Doughboy, as part of its 2004 acquisition of International Multifoods Corp. The deal added an array of so-called center-of-the-store brands, including muffin mixes and frostings, to its portfolio.
More recently, the drive toward healthy-eating has drawn consumers to the perimeter of grocery stores in search of fresh produce and less processed foods. This shift in taste and habits has challenged U.S. consumer-packaged food companies and cut into growth for many large, well-known brands.
Orrville, Ohio-based Smucker’s flour, baking ingredients, baking mixes and frosting businesses have lagged, together accounting for about 5 percent of revenue in fiscal 2017, down from about 10 percent in 2014, according to data compiled by Bloomberg.
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