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J.M. Smucker to Expand Snacks Business, Acquires Sahale

Food manufacturer The J. M. Smucker Company (SJM) is on track to expand its snacks portfolio. It recently signed a definitive agreement to acquire Seattle, WA-based Sahale Snacks, Inc. for an undisclosed amount.

Sahale is a privately-held company, which manufactures and deals in marketing of premium, branded nut and fruit snacks. Its products are primarily sold in the United States under the Sahale Snacks brand.

Per the deal, Smucker will acquire a leased facility in Seattle and approximately 150 employees of Sahale. The transaction is expected to conclude by mid-September and will benefit the company’s earnings only after fiscal 2015.

The acquisition is expected to enhance Smucker’s portfolio with innovative and in vogue snacking products. The deal is a strategic fit for Smucker as Sahale’s premium lifestyle snacks brand perfectly complement its products like fruit spreads, retail packaged coffee, peanut butter, shortening and oils, ice cream toppings and sweetened condensed milk.

With the change in consumer preferences, there is a huge demand for innovative snack products with unique flavors. Other snacking companies like The Frito Lay division of PepsiCo Inc. (PEP), Snyder's-Lance, Inc. (LNCE) and Mondelez International, Inc. (MDLZ) have been focusing on introducing different snacking options for its customers, which help maintain a steady energy level throughout the day.

Besides the snacks business, Smucker has also tried its hand at specialty and organic foods. Demand for healthy, nutritious and natural foods has grown in recent years as people are more concerned about obesity and other health problems. In Aug 2013, the company acquired CA-based Enray Inc., which is a privately-held company that manufactures and sells organic, gluten-free ancient grain products.

The American Heart Association estimates that currently about one-third of U.S. adults are obese. If the current obesity growth trend continues, total healthcare costs attributable to obesity could account for as high as 16% to 18% of U.S. health expenditure. As a result, Americans are gradually spending more on higher-priced organic and specialty food products despite overall decline in consumer spending.

Smucker holds a Zacks Rank #3 (Hold).

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