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Family Business Roundup: Smucker, Takata, and LVMH

Smucker snaps up Big Heart Pet Brands for $3.2 billion; Japanese airbag maker adds $30 million to annual losses; and LVMH posts 64% gain in annual profit

Smucker snaps up Big Heart Pet Brands for $3.2 billion

J M Smucker, the Ohio-based family business founded in 1897, has this week purchased Big Heart Pet Brands for $3.2 billion (€2.8 billion).

The deal, Smucker’s biggest ever, will add brands like Milk-Bone dog treats and Meow Mix cat food to a portfolio that already includes Folgers Coffee and Smucker’s jellies.

The acquisition will offer shareholders of Big Heart, formerly Del Monte Corp, 17.9 million shares and $1.3 billion in cash, according to a press release associated with the deal.

Company CEO and family member Richard Smucker said: “Obviously there is a lot we need to learn about the pet-food business, but there was a lot we didn’t know about the coffee when we got into that.”

Smucker anticipates the deal will contribute about $2.4 billion to net sales before mid-2016, and estimates the annual growth rate could reach up to 5%.

Japanese airbag maker adds $30 million to annual losses

Japanese airbag maker Takata Corp, headed by third-gen Shigehisa Takada, has reported greater annual losses than previously forecast after spending $30 million (€26.2 million) replacing faulty airbags.

The results suggest that Takata, which has been embroiled in a long running global recall crisis, is also struggling to regain the trust of its consumers. The company is now reporting a nine-month net loss of 32.5 billion yen ($277 million) compared to the forecast 25 billion yen.

Takata's air bag inflators have been found to explode with too much force, spraying shrapnel inside cars. The fault has been linked with the deaths of six people. The family business has been forced to recall nearly 25 million vehicles since 2008.

The 81-year-old company, 59% owned by the Takada family, has already seen a 60% drop in the company’s share price this year, knocking $750 million off the company’s value.

LVMH posts 64% gain in annual profit

French luxury group LVMH, whose brands include Givenchy and Louis Vuitton, has revealed a year-on-year profit increase of 64% bolstered by the sale of its stake in rival family business Hermes International.

The profit from recurring operations, which does not include the Hermes gain, declined 5% as demand from Chinese shoppers slowed amid a struggling economy.

Bernard Arnault's giant was hit with an €8 million penalty from the French financial regulator Autorite des Marches Financiers in early July for failing to comply with disclosure rules, which require shareholders to disclose their stakes in 5% increments.

LVMH covertly built its Hermes shares to more than 14% through a complex web of equities derivatives purchased through foreign investment vehicles, ensuring none held more than a 5% stake.

Overall, business is improving, LVMH said in a statement. Fourth-quarter sales grew 10% as the US market gained pace and as European sales improved late in the period.

“Despite a climate of economic, currency and geopolitical uncertainties, LVMH is well-equipped to continue its growth momentum across all business groups in 2015,” the company said in the statement.


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