Food sector company J.M. Smucker (SJM 1.18%) is set to gain $550 million in cash from divesting its Crisco brand to B&G Foods (BGS -0.38%), a branded food holding company. In today's press release, Smucker says it is selling the cooking oil and shortening brand because its "strategic priorities include an increased focus and allocation of resources toward pet food and pet snacks, coffee, and snacking to maintain momentum in these categories," according to President and CEO Mark Smucker.

B&G Foods, a small-cap dividend stock paying its dividend regularly since its IPO 16 years ago, already boasts a lineup of approximately 50 brands. These include well-known names such as Green Giant, Cream of Wheat, Polaner fruit spreads, Durkee, and others.

A man shopping the cooking oil section at a supermarket.

Image source: Getty Images.

B&G also issued a press release regarding the acquisition. In it, the company said it expects Crisco to generate $270 million in net sales during 2021, providing $0.45 to $0.50 in adjusted diluted earnings per share (EPS) and tax benefits of $75 million. CEO Kenneth Romanzi said "Crisco is an excellent complement to our existing portfolio of brands, including our Clabber Girl and other baking powder brands" and noted that it was chosen for its "defensible market positions and strong cash flow," like other food brands B&G has bought up.

Smucker has been shifting away from its previous markets of baking supplies and other kitchen staples for some time. Some commentators, such as Zacks Equity Research, see potential in Smucker, citing such factors as its recent 70% year-over-year e-commerce growth, and its shift toward prominent coffee and pet food brands -- a strategic makeover the announced Crisco divestiture should help fund.