The J. M. Smucker Co. has completed an acquisition of the coffee brands and business operations of Rowland Coffee Roasters, Inc., a privately-held company headquartered in Miami, Fla.
Rowland Coffee's products are primarily sold under the leading Hispanic Cafe Bustelo® and Cafe Pilon brands with distribution in retail and foodservice channels concentrated in the northeastern U.S. and southern Florida. It is a leading producer of espresso coffee in the U.S., generating total net sales in excess of $110 million in calendar 2010. The acquisition includes a manufacturing, distribution, and office facility in Miami.
"This acquisition strengthens and broadens the breadth of our leadership in the U.S. retail coffee category," said Richard Smucker, executive chairman and co-chief executive officer in a prepared statement. "The addition of the Cafe Bustelo® and Cafe Pilon coffee brands, each with a rich heritage, provides us with a unique opportunity to establish a strong presence in coffee with Hispanic consumers in the U.S."
"This is an exciting bolt-on transaction and a good strategic fit for our company," said Vince Byrd, president and chief operating officer. "The acquisition is expected to be accretive in fiscal 2012, and provides our coffee business with greater scale and reach. Our proven ability to leverage our existing infrastructure will provide additional growth opportunities for these trusted brands."
The company completed the $360 million transaction with cash on hand and borrowings under its existing credit facility. The transaction is expected to contribute approximately $0.05 per diluted common share to fiscal 2012 earnings, excluding one-time costs of the transaction.
The company intends to leverage its existing coffee infrastructure to expand distribution and marketing support of the acquired brands. Manufacturing operations are expected to be consolidated into the company's existing coffee facilities in New Orleans, La., in approximately three years. The consolidation of operations is expected to achieve additional cost savings of approximately $0.10 per diluted common share in the first full year after completion of consolidation, excluding one-time costs.
One-time costs of the acquisition are estimated to total $25 million to $30 million, including approximately $15 million of noncash charges associated with closing the Miami facilities. Approximately $10 million of the one-time costs are expected to be incurred in fiscal 2012, with the remaining incurred through 2014.
The company is currently in its year-end quiet period and, therefore, will answer investor related follow-up questions during its June 9, 2011, fourth quarter and fiscal 2011 earnings conference call.
