July 22, 2011

MegaMex Foods buys Fresherized Foods

MegaMex Foods LLC, a joint venture between Hormel Foods Corp. and Herdez Del Fuerte S.A. de C.V., will acquire Fresherized Foods, the manufacturer of Wholly Guacamole and other products, Hormel announced.

Terms of the deal were not disclosed, but the transaction is expected to close in August.

Fresherized Foods uses high-pressure processing to manufacture Wholly Guacamole, the nation's leading brand of prepared guacamole. The company's portfolio also includes Wholly Salsa and Wholly Queso.

"This transaction further demonstrates the clear commitment of the MegaMex Foods partners to become the US leader in Mexican food," Jeffrey Ettinger, chairman of the board, president and chief executive officer at Hormel Foods, said in a statement. "The addition of the exciting, on-trend Wholly Guacamole, Salsa and Queso products will bring excellent new flavors and varieties to our growing roster of Mexican-inspired brands and products."

Stephens Inc. Equity Research analyst Farha Aslam concluded the acquisition is a positive for Hormel. "We are increasing our F2011 EPS estimate to US$1.76 from US$1.75 and our F2012 EPS estimate to US$1.88 from US$1.85 in light of the pending acquisition," she wrote. "Hormel will finance the acquisition with cash on hand so we are not modeling for the interest rate to increase."