• The Wall Street Journal, Wednesday, June 4, 2008 10:15 AM

J.M. Smucker is expected this week to seal a deal to buy the Folgers coffee business from Procter & Gamble in an all-stock deal, according to sources. Given Folgers's annual sales of $1.6 billion, the business could fetch a price tag of $2 billion or more.

Folgers is the top-selling ground coffee in the U.S., and the purchase will catapult Smucker into the leading position in the coffee market. The brand, though, has to contend with the popularity of Starbucks chain of coffee stores and the proliferation of gourmet coffee brands.

The deal would be a departure from P&G's previous plans to separate Folgers into a stand-alone business, as it announced it likely would in January. P&G had decided to shed the Folgers business as part of an effort to reduce its exposure to businesses that can't keep pace with its annual sales-gain target of 4% to 6%. Folgers has a sales-growth rate of about 2% to 3%.

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