Smucker Adds P&G's Folgers into Product Mix

6/4/2008

The J. M. Smucker Company and The Procter & Gamble Company (P&G) sign a definitive agreement to merge the Folgers coffee business into Smucker in an all-stock reverse Morris Trust transaction valued at approximately $3.3 billion, including the assumption of an estimated $350 million of Folgers debt. As part of the transaction, Smucker will issue a one-time special dividend of $5 per share to Smucker shareholders as of the record date, prior to the merger, a clear indication of the strength of the combined businesses. Following this one-time special dividend, P&G shareholders will receive approximately 53.5 percent of Smucker in a tax-free stock-for-stock merger.

"Folgers is a perfect strategic fit within our portfolio of leading and iconic North American food brands," says Tim Smucker, chairman and Co-CEO of Smucker. "Folgers will become our tenth No. 1 brand in North America and will further enhance the high quality, great tasting, diverse product offerings that consumers expect from Smucker. We are proud to welcome the talented Folgers employees to the Smucker Company where brands and people are about more than making and marketing products. We believe the many common values shared by our organizations represent a great foundation for a smooth integration."

Assuming Folgers is owned for all of Smucker's fiscal year 2009; net sales are expected to increase to approximately $4.7 billion, and it is estimated that the transaction would be accretive by approximately 9 percent to fiscal year 2009 earnings per share. Smucker also expects to realize synergies in excess of $80 million -- the profit contribution from Folgers and fully realized synergies of more than $80 million are expected to result in estimated earnings before interest, taxes, depreciation, and amortization of $820 million.

"Smucker has proven to be an excellent steward of Jif and Crisco since taking ownership of the brands from P&G in 2002, and I am confident that Folgers will continue to thrive as part of The J. M. Smucker Company," adds A.G. Lafley, chairman of the board and CEO of P&G. "Smucker's core beliefs, values, and principles are very much the same as those of P&G. We cannot think of a better long-term home for P&G's former coffee employees and brands than Smucker."

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