Hormel Foods Corporation (NYSE: HRL) today announced that it has entered
into a definitive agreement to acquire Applegate Farms, LLC
(“Applegate”), 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 folks 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.
Credit Suisse is serving as exclusive financial advisor to Hormel Foods
in connection with this transaction. The selling shareholders are
Stephen McDonnell and Swander Pace Capital.
For more information on Applegate, please visit http://www.applegate.com/.
CONFERENCE CALL
A conference call will be webcast at 7:15
a.m. ET on Wednesday, May 27, 2015. Access is available at www.hormelfoods.com.
The call will also be available via telephone by dialing 800-723-6498
and providing the access code 5821125. An audio replay is available by
calling 888-203-1112 and entering access code 5821125. The audio replay
will be available beginning at 10:15 a.m. ET on Wednesday, May 27, 2015,
through 10:15 a.m. ET on Wednesday, June 10, 2015. The webcast replay
will be available at 10:15 a.m. ET, Wednesday, May 27, 2015, and will
remain on our website for one year.
About Hormel Foods
Hormel Foods Corporation, based in
Austin, Minn., is a multinational manufacturer and marketer of
consumer-branded food and meat products, many of which are among the
best known and trusted in the food industry. The company leverages its
extensive expertise, innovation and high competencies in pork and turkey
processing and marketing to bring branded, value-added products to the
global marketplace. The company is a member of the Standard & Poor's
(S&P) 500 Index, S&P 500 Dividend Aristocrats for 2014, was named the
2013 Sustainable Supply Chain of the Year by Refrigerated & Frozen Foods
magazine, and was again named one of “The 100 Best Corporate Citizens”
by Corporate Responsibility Magazine for the seventh year in a row.
Hormel Foods was also recognized as a 2015 Military Friendly Employer by
G.I. Jobs magazine, on the 2015 Best for Vets Employers List by Military
Times, and was named one of the 2015 40 Best Companies for Leaders by
Chief Executive magazine. The company enjoys a strong reputation among
consumers, retail grocers, foodservice and industrial customers for
products highly regarded for quality, taste, nutrition, convenience and
value. For more information, visit http://www.hormelfoods.com.
Forward-Looking Statements
This news release contains
forward-looking information based on management’s current views and
assumptions. Actual events may differ materially. Factors that may
affect actual results include, but are not limited to: whether and when
the required regulatory approvals will be obtained, whether and when the
closing conditions will be satisfied, whether and when the transaction
will close, whether and when the Company will be able to realize the
expected financial results and accretive effect of the transaction, and
how customers, competitors, suppliers and employees will react to the
transaction. Please refer to the cautionary statement regarding
Forward-Looking Statements and Risk Factors on pages 29-36 in the
company’s Form 10-Q for the fiscal quarter ended January 25, 2015. The
company’s Form 10-Q can be accessed at www.hormelfoods.com
under “Investors-SEC Filings.”
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