Conagra ends sale of Wesson oil business to Smucker

US-based food company Conagra Brands has terminated the agreement for selling its Wesson oil business to The JM Smucker Company after US Federal Trade Commission (US FTC) announced its decision to challenge the pending transaction.

Earlier this week, the commission voted 2-0 to file an administrative complaint and directed its staff to seek a temporary restraining order and preliminary injunction in federal court to halt Smucker’s proposed $285m acquisition.

The commission believed that the proposed merger could reduce competition for the branded canola and vegetable oils sold to grocery stores and other retailers in the US market.

FTC Bureau of Competition deputy director Ian Conner said: “Today’s announcement from Smucker and Conagra that they will abandon their proposed merger is good news for consumers across the US because they will continue to reap the benefits of vigorous competition in the market for branded canola and vegetable oils.”

Conagra Brands official 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 JM Smucker Company rather than pursue litigation.”

In May last year, Smucker signed a definitive agreement with Conagra to acquire its Wesson oil business for approximately $285m.

Under the agreement, Conagra agreed to produce products retailed under the Wesson brand, as well as offer provide certain other transition services for up to one year following the close of the transaction.

After completion of the period, Smucker planned to merge Wesson production into its existing oils manufacturing facility located in Cincinnati, Ohio.

With the termination of the agreement, Conagra intends to evaluate the role of the Wesson oil business within its portfolio.