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J.M. Smucker Loads Up On Debt For Dog Food

Have the smart guys at Kohlberg, Kravis & Roberts just led another great American company down the primrose path?

Traders applauded what was called a $3.2 billion deal for J.M. Smucker (SJM) to buy the former Del Monte pet food lines from KKR and some other private equity funds. But did they look at the terms?

J.M. Smucker CEO Richard Smucker is betting his company on some long-in-the-tooth pet food brands, and loading himself up with debt in the process.

J.M. Smucker is paying $1.3 billion in cash and 17.9 million shares, about 17% of the company, for the makers of such brands as Milk Bone, Kibbles & Bits and Meow Mix. But the company is also taking on $3.2 billion in debt, and some of the cash payment will have to go on the books as debt because J.M. Smucker's latest quarterly report shows it with just $105 million… Read More …