Hormel Foods Corporation announced that it has entered into a definitive agreement to acquire Applegate Farms LLC, owner of the Applegate brand, the No. 1 brand in the natural and organic value-added prepared meats category. The transaction is subject to customary closing conditions, including the receipt of regulatory approvals in the United States, and is expected to close within 60 days.
“A growing number of consumers are choosing natural and organic products. This deal allows us to expand the breadth of our protein offerings to provide consumers more choice,” said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer at Hormel Foods. “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.”
Applegate will operate autonomously as a standalone subsidiary in the company’s Refrigerated Foods segment. Applegate has 100 employees located primarily in Bridgewater, New Jersey, and the company will be managed by this core Applegate team plus a few new people from the parent company who will relocate to Bridgewater. Applegate has strategic relationships with a diverse set of manufacturers and processors who draw from approximately 1,800 family farms.
“Over the last 28 years Applegate has brought transparency and clean ingredients to American favorites and classics like hot dogs, bacon and deli meat,” said Stephen McDonnell, Applegate founder and long-time CEO. “It was my mission from the start to change the way we think about meat – how it’s raised and produced – and this agreement is definitely a continuation of that mission.”
Applegate 2015 annual sales are expected to be about $340 million. The purchase price is approximately $775 million. Including estimated deal costs and fair value adjustments, the deal is projected to be neutral to Hormel Foods earnings per share in fiscal 2015, and accretive by approximately 7 to 8 cents per share in fiscal 2016. Hormel Foods expects this acquisition to be accretive to company growth targets.
Source: Hormel Foods Corp.