Divestitures

3 Months Ended

Jul. 31, 2022

Discontinued Operations and Disposal Groups [Abstract]

Divestitures

Subsequent to January 31, 2023, we entered into a definitive agreement to sell several of our pet food brands to Post Holdings, Inc. (“Post”). We expect the transaction to close during the fourth quarter of 2023, subject to closing conditions, including the receipt of required regulatory approvals. The transaction includes the Rachael Ray® Nutrish®, 9Lives®, Kibbles ’n Bits®, Nature’s Recipe®, and Gravy Train® brands, as well as our private label pet food business, inclusive of certain trademarks and licensing agreements, manufacturing and distribution facilities in Bloomsburg, Pennsylvania, manufacturing facilities in Meadville, Pennsylvania, and Lawrence, Kansas, and approximately 1,100 employees who support these pet food brands. Under our ownership, these brands are expected to generate net sales of approximately $1.5 billion in 2023, primarily included in the U.S. Retail Pet Foods segment. The transaction is valued at approximately $1.2 billion, consisting of $700.0 in cash, subject to a working capital adjustment, and approximately 5.39 million shares of Post common stock. Based on the expected proceeds, less estimated costs to sell, we anticipate recognizing a pre-tax loss of approximately $815.0 in the fourth quarter of 2023, inclusive of the estimated carrying value of the net assets to be disposed, primarily consisting of goodwill and other intangible assets.

On January 31, 2022, we sold the natural beverage and grains businesses to Nexus Capital Management LP (“Nexus”). The transaction included products sold under the R.W. Knudsen® and TruRoots® brands, inclusive of certain trademarks, a licensing agreement for Santa Cruz Organic® beverages, dedicated manufacturing and distribution facilities in Chico, California, and Havre de Grace, Maryland, and approximately 150 employees who supported the natural beverage and grains businesses. The transaction did not include Santa Cruz Organic nut butters, fruit spreads, syrups, or applesauce. Under our ownership, the businesses generated net sales of $106.7 in 2022, primarily included in the U.S. Retail Consumer Foods segment. Final net proceeds from the divestiture were $98.7, which were inclusive of a working capital adjustment and net of cash transaction costs. We recognized a pre-tax gain of $28.3 related to the natural beverage and grains businesses within other operating expense (income) – net in the Condensed Statements of Consolidated Income, of which $26.7 was recognized during the second half of 2022, and the remaining $1.6 was recognized upon finalization of the working capital adjustment during the first quarter of 2023.

On December 1, 2021, we sold the private label dry pet food business to Diamond Pet Foods, Inc. (“Diamond Pet Foods”). The transaction included dry pet food products sold under private label brands, a dedicated manufacturing facility located in Frontenac, Kansas, and approximately 220 employees who supported the private label dry pet food business. The transaction did not include any branded products or our private label wet pet food business. Under our ownership, the business generated net sales of $62.3 in 2022, included in the U.S. Retail Pet Foods segment. Final net proceeds from the divestiture were $32.9, which were net of cash transaction costs. Upon completion of this transaction during the third quarter of 2022, we recognized a pre-tax loss of $17.1, within other operating expense (income) – net in the Condensed Statement of Consolidated Income.