Conagra Brands and The J.M. Smucker Co. have agreed to terminate the definitive agreement for J.M. Smucker to acquire the Wesson oil brand from Conagra. The move follows the FTC’s decision, announced on March 5, to challenge the pending transaction.
“While we disagree with the FTC’s conclusion, we have mutually determined with Conagra that it is not in the best interest of either party to expend the anticipated significant additional time and resources to challenge the FTC’s administrative complaint,” said Mark Smucker, CEO of J.M. Smucker. “We believe the FTC underestimated the significant role that private label brands play in the oils category, which account for approximately 50 percent of all cooking oil sales and hold significantly higher market share at some retailers. This transaction was expected to provide significant cost synergies to ensure that branded oil products would remain competitive in the market. We continue to be committed to delivering value to our consumers and customers with our Crisco brand and oils business.”
ConAgra says it intends to continue its evaluation of the role of the Wesson oil business within its portfolio.
Reacting to ConAgra and J.M. Smucker’s decision, Ian Conner, deputy director of the Bureau of Competition for the FTC issued this statement: “Today’s (March 6) announcement from Smucker and Conagra that they will abandon their proposed merger is good news for consumers across the United States because they will continue to reap the benefits of vigorous competition in the market for branded canola and vegetable oils.”
On March 5, the commission voted 2-0 to file an administrative complaint and authorize staff to seek a temporary restraining order and preliminary injunction in federal court to stop the proposed $285 million acquisition.
The FTC charged that the proposed merger would likely reduce competition in the U.S. market for branded canola and vegetable oils sold to grocery stores and other retailers.
According to the FTC, the commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appeared to the commission that a “proceeding is in the public interest.”