P&G Sell Folgers Coffee Brand to Local Food Company

06 June 2008

CINCINATTI: In pursuit of its strategy to focus marketing and investment exclusively on its mainstream growth assets, Procter & Gamble this week agreed to transfer ownership of its Folgers coffee brand to compatriot Ohio firm J M Smucker.

The $3.3 billion (€647.1m; £511.6m) all-stock deal includes $350m of Folgers' debt. Its bizarre outcome is that P&G's shareholders will acquire a controlling 53% of Smucker shares – a trick even David Blaine would find hard to emulate..

Folgers sits reasonably well beside Smucker's current brand range – jam, jelly, preserves peanut butter and ice cream toppings.

P&G, as ever, emerges from the labyrinthine deal smelling of aftershave. Not only does it spare its shareholders the pain of paying tax on the sale, it "minimises earnings per share dilution", according to the firm's chairman/ceo A G Lafley.

Given P&G's annual brand growth targets – estimated at between 6% and 13% - the Pringles snacks brand and Duracell batteries business are likely to be next in line for disposal.

WARC News identified the Folgers brand as a prime candidate for disposal back in January.

Data sourced from Financial Times; additional content by WARC staff