FTC Complaint Halts Conagra’s Acquisition of Smucker’s Wesson Oil

Conagra Brands Inc. will not be selling its Wesson oil business to the J.M. Smucker Co. after FTC challenged the pending transaction. Wesson is an edible oil brand in the United States, with product offerings including vegetable, canola, corn and blended oils.

On Monday, March 6, FTC 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 US$285 million acquisition. The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest.

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.

On Tuesday, March 7, Conagra and Smucker announced they terminated the agreement. "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, chief executive officer, J.M. Smucker Co., in a statement. "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.

In a different statement, Conagra said, "While we are disappointed by and disagree with the Commission's decision, we have determined that it is in the best interest of our shareholders, customers and employees to terminate the agreement to sell the Wesson oil business to The J.M. Smucker Co. rather than pursue litigation.” The Conagra statement further noted it will continue to evaluate the role of the Wesson oil business within its portfolio.

The deal between Conagra and J.M. Smucker was announced in May 2017

In February, Conagra announced that it entered into a definitive agreement to sell its Del Monte processed fruit and vegetable business in Canada to Bonduelle Group, and it completed the acquisition of the Sandwich Bros. of Wisconsin business, which produces frozen breakfast and entrée flatbread pocket sandwiches.

In 2017, Conagra acquired Angie's Artisan Treats LLC, maker of Angie's® BOOMCHICKAPOP® ready-to-eat popcorn from TPG Growth.