JM Smucker to Acquire Ainsworth for $1.7B

J.M. Smucker Co. (SJM) is planning to buy Ainsworth Pet Nutrition LLC for $1.7 billion, making it the latest food maker to increase its focus on pets.

Smucker, which makes household brands like Jif peanut butter and Folgers coffee, said it is also selling its U.S. baking business with brands like Hungry Jack and Pillsbury. (See also: Campbell, Smucker Adapt to Changing Tasks.)

Food makers are increasingly trying to tap the trend of pet owners spending more on pet-food. Along with snacks, pet food is one of the fastest-growing categories in dry groceries. It draws about $30 billion in yearly sales, according to Smucker CEO Mark Smucker.

Smucker said it expects sales to increase $800 million in the first year with its Ainsworth brands, which include Rachael Ray Nutrish pet foods. The deal is expected to generate about $55 million in savings in the first three years and also includes a tax benefit of about $200 million.

Other major food companies have also been beefing up their pet businesses. Mars Inc. bought VCA Inc., a veterinary and pet daycare business, for $7.7 billion last year. And General Mills (GIS) is in the process of purchasing Blue Buffalo Pet Products, a pet-food maker, for $8 billion. Smucker itself first delved into the pet business three years ago when it acquired Big Heart Pet Brands with its Meow Mix cat food and Milk Bone dog treats in a $3.2 billion deal.

Shares of Smucker have traded volatility over the past year. The stock is down about 5.4% in the last 12 months, and off about 3.7% the past month.

The company reported sales of pet food brands increased 2.1% to $1.64 billion while sales of consumer retail foods declined 4.7% to $1.54 in the nine months ended Jan. 31.