May 28, 2015

Hormel Foods continues acquisition binge, to take over Applegate Farms

Packaged meat firm Hormel Foods has announced it will acquire organic prepared meat firm Applegate Farms for US$775 million, its biggest acquisition so far, following those of Skippy in 2013 and of CytoSport last year.

After the announcement on Tuesday Hormel Foods shares rose 3.2%.

The acquisition is expected to be finalised within 60 days after the customary closing conditions, including the receipt of regulatory approvals in the US. 

Hormel chief executive Jeffrey M. Ettinger said that with the Applegate purchase, Hormel will acquire more presence in the Pacific Northwest and East Coast, where half of Applegate's sales are, as well as add meat products that cater to people who opt for natural and organic ones.

He described the natural and organic food niche as "a dynamic and growing category".

"We really look at it as a movement and not a fad, and the Applegate team has been a leader in that marketplace.

"The Applegate team has built a great brand, and consumers can rest assured there will not be any changes to the way Applegate meats are raised and produced. Together, we can provide a faster path to expanded offerings in this high-growth category", Ettinger said.

Hormel, he added, would be able to accelerate and expand Applegate's move to become more visible in mainstream retailing.

Stephen McDonnell, Applegate founder and long-time CEO, said, "Over the last 28 years Applegate has brought transparency and clean ingredients to American favorites and classics like hot dogs, bacon and deli meat. It was my mission from the start to change the way we think about meat—how it's raised and produced—and this (acquisition) agreement is definitely a continuation of that mission".

Hormel is known for its Spam and Skippy brands.