Nine months after a agreement to sell Wesson Oil to J.M. Smucker Company fell through, Conagra has agreed to sell the brand to Richardson International, Canada’s largest agribusiness, for an undisclosed amount.
Through the deal, Richardson will acquire Wesson Oil, a century-old mainstay canola and vegetable cooking oil name on the U.S. market, along with the 280,000 square-foot Wesson production facility located in Memphis, Tennessee, which will serve to complement Richardson’s food and ingredients division.
For Conagra, the sale is indicative of its continuing transformation since Sean Connolly assumed the role of CEO in 2015.
Since that time, Conagra has undertaken a strategic plan to reinvigorate its portfolio to better align with consumer demands and reflect a more modern lineup. Toward this end, Conagra divested its Ralcorp private label business to TreeHouse Foods in the fourth quarter of 2015 for $2.7 billion, sold ingredient sourcing and distribution company JM Swank to private equity firm Platinum Equity in June 2016, and sold flavors and seasoning business Spicetec to Givaudan in May 2016. Meanwhile, the company acquired salsa and sauce manufacturer Frontera Foods in September of last year, and Pinnacle Foods in June of this year for $8.1 billion.
This is not the first attempt by Conagra to divest Wesson. In May of last year the company announced an agreement to sell the brand to J.M. Smucker Company on an all-cash deal valued at $285 million.
At the time, JM Smucker anticipated that the acquisition would add $230 million in annual sales to its sheet, and expected the transaction to generate earnings before interest, taxes, depreciation, and amortization (EBITDA) of about $30 million. Additionally, the company expected the addition to contribute approximately $0.10 cents to the company’s adjusted earnings per share within the first full year after closing. But it was not to be.
In March of this year the U.S. Federal Trade Commission (FTC) challenged the acquisition, stating that because JM Smucker already owned the iconic Crisco oil brand, the added acquisition of Wesson would give Smucker’s a 70 percent market share for canola and vegetable oils.
“Cooks across the U.S. benefit from the competition between the staple brands Wesson and Crisco. We are taking this action to preserve the benefits of that competition,” said Ian Conner, deputy director of the Bureau of Competition, in a release explaining the decision.
Barring any similar objections, Richardson expects the deal for Wesson to close in the first quarter of 2019.
Once completed, the deal will serve to strengthen Richardson’s growth strategy for its food business, and plans to invest in the Memphis facility and to reinvigorate the brand.
“The rich history of both our company and the Wesson brand makes this an exciting acquisition for us,” said Curt Vossen, president and CEO of Richardson. “We believe that consumers will continue to seek out high quality foods and aligning with the Wesson brand expands our ability to meet that consumer desire.”
-Lynda Kiernan