J.M. Smucker is considering a sale of its baking brands, including Pillsbury, according to people with knowledge of the situation.
The food manufacturer is working with an adviser as it weighs options for the unit, which also includes the Robin Hood flour and cereal brand and Martha White baking mixes, said the people, who asked not to be identified because the details aren’t public.
The business could fetch as much as $700 million, one of the people said. A final decision to pursue a sale hasn’t been made and Smucker may keep the unit, they added.
“We do not comment on rumour or speculation,” Smucker spokeswoman Maribeth Burns said in an emailed statement. “We are always evaluating opportunities that support our strategic priorities, grow our business and drive shareholder value.”
Smucker bought Pillsbury, the well-recognised 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 centre-of-the-store brands, including muffin mixes and frostings, to its portfolio.
More recently, healthy-eating initiatives have increasingly drawn consumers to the perimeter of stores in search of fresh produce and less processed foods. This shift in taste and habits have challenged US consumer-packaged food companies and cut into growth for many large, well-known brands.
Smucker’s flour, baking ingredients, baking mixes and frosting businesses have lagged, together accounting for about 5% of revenue in fiscal 2017, down from about 10% in 2014, according to data compiled by Bloomberg.
The Orrville, Ohio-based company said in a February 16 statement that Pillsbury contributed to a decline in net sales for its US retail consumer foods segment in the fiscal third quarter.
Smucker, whose history goes back to crushing apples from trees planted by Johnny Appleseed in the 1800s, is focusing on product innovation in segments such as coffee, peanut butter and snacks as part of its efforts to boost sales and earnings.
On Tuesday, the company said it had called off a $285 million deal to acquire the Wesson oil brand from Conagra Brands, after the US Federal Trade Commission challenged the transaction saying it could lessen competition in the market.