Hormel Foods has announced that it has entered into a definitive agreement to acquire Columbus Manufacturing, Inc., parent of premium deli meat provider Columbus Craft Foods, from Chicago-based Arbor Investments. In a statement, the maker of Hormel®, Jennie-O®, Applegate®, and Di Lusso® brand products announced it planned to purchase the deli meat and salami maker for approximately $850 million.
“We are pleased to add Columbus to the Hormel Foods family. Columbus has an outstanding reputation in the food industry and is well-positioned in the advantaged retail deli category,” said Jim Snee, President and Chief Executive Officer at Hormel Foods, in a recent press release. “Columbus is capitalizing on one of the fastest-growing areas in the retail grocery store with premium, authentic products that are on-trend with today’s consumers who are looking for unique experiences, flavors, and products.”
As a result of the deal, Hormel’s earnings are expected to increase with the addition of Columbus’s premium chicken, turkey, pork, and beef meats, which Reuters reports have been antibiotic-free since last year. Sales for Chicago-based Arbor Investments-owned Columbus generate about $300 million and are now expected to grow by 5% next year.
“As a millennial-focused brand, Columbus has generated category-leading growth through a passionate commitment to quality, simplicity, and time-honored recipes,” said Joe Ennen, Chief Executive Officer of Columbus Manufacturing, Inc, in the same statement. “In Hormel we are joining an organization whose values and culture perfectly align with our own.”
The acquisition will enlarge Hormel's lineup of retail products. Columbus will be joining Jennie-O®, Applegate®, and Di Lusso® as Hormel seeks to broaden its portfolio and presence in the premium-quality fresh food industry.
“The acquisition of Columbus will serve as a catalyst for uniting all our deli businesses into one customer-facing organization,” Snee said. “This acquisition significantly enhances our scale in the deli by broadening our portfolio of products, customers, and consumers. The synergies we can unlock with this acquisition are clear, and I’m excited for the next evolution of our company.”
Hormel has been hard at work making deals these days. In the same Reuters report, it stated that the company recently bought Brazilian sausage and salami maker Cidade do Sol in August for $104 million. This purchase will enable Hormel to bite into the South American market. And, to further establish itself within the North American market, the company recently purchased Chicago-based Fontanini Italian Meats and Sausages for $425 million.
The transaction is subject to customary closings, but Barclays and Faegre Baker Daniels LLP advised Hormel and BofA Merrill Lynch and DLA Piper LLP (US) advised Columbus Manufacturing, and Rothschild financially advised the company.
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