Cases & Deals

Procter & Gamble sells its Folgers coffee business for $3.3 billion

Client(s) Procter & Gamble Company, The

Jones Day advised The Procter & Gamble Company in the divestiture of its Folgers coffee business, effected by way of an all-stock reverse Morris Trust transaction with The J.M. Smucker Company. The cost of the transaction to Smucker is approximately $3 billion, including the issuance of Smucker common shares and $350 million of Folgers debt guaranteed by Smucker in connection with the merger. When the deal closed, the Folgers entity merged with a subsidiary of Smucker, surviving as a wholly-owned subsidiary of Smucker. In connection with that merger, the outstanding shares of Folgers were converted into shares of Smucker. Procter & Gamble shareholders received approximately 53.5% of the shares of Smucker on a fully diluted basis, after giving effect to the transactions.

The reverse Morris Trust structure allowed Procter & Gamble to divest its Folgers business in a tax-efficient manner (the distribution and merger were tax free to Procter & Gamble and its stockholders) in a business combination transaction with a strategic acquiror. Interestingly, this transaction follows in the footsteps of Smucker's 2001 acquisition of the "Jif" and "Crisco" brands from Procter & Gamble (in which Jones Day represented Smucker), which also was structured as a reverse Morris Trust transaction and was one of the first public reverse Morris Trust transactions ever done.

In addition to M&A representation, Jones Day provided antitrust, capital markets, employee benefits, and financing advice regarding this transaction.