The J.M. Smucker Company (NYSE: SJM) and The Procter & Gamble Company (NYSE: PG) announced on Wednesday the signing of a definitive agreement to merge the Folgers coffee business into Smucker in an all-stock transaction valued at approximately $3.3 billion, including the assumption of an estimated $350 million of Folgers debt.

As part of the transaction, Smucker will issue a one-time special dividend of $5 per share to Smucker shareholders as of the record date, prior to the merger, a clear indication of the strength of the combined businesses.

Following this one-time special dividend, P&G shareholders will receive approximately 53.5 percent of Smucker in a tax-free stock-for-stock merger.

Folgers is the leading producer of retail packaged coffee products in the United States with a 150-year history. Folgers' broad portfolio of products are sold primarily under its flagship Folgers brand.

This brand joins a widely recognized portfolio of brands that include Smucker's, Jif, Crisco, Pillsbury, Eagle Brand, Hungry Jack, Robin Hood and Bick's.

The proposed transaction creates a company with annual sales approaching $5 billion.

With the addition of Folgers, the total size of the categories in which Smucker participates increases to approximately $15 billion as compared to $1 billion in 2002.

The addition of Folgers, a billion dollar brand, is consistent with Smucker's strategy to own and market number one food brands in North America.

Source: www.smuckers.com

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