Hormel Foods, the maker of Spam, agreed to buy closely held Applegate Farms LLC for about $775 million in an effort to gain more credibility in natural foods.
The acquisition, slated to close in the next two months, would bring natural and organic sausages and hot dogs to the company’s line-up. The deal will be neutral to earnings per share in the current fiscal year, Austin, Minnesota-based Hormel said in a recent statement.
Buying Applegate will give Hormel a brand that sources meat from about 1,800 family farms and sells a range of products from turkey deli slices and chicken strips to bacon and corn dogs. Hormel said that the company is expected to have about $340 million in 2015 sales.
Hormel is the latest packaged-food company to expand its natural and organic offerings through acquisitions. Cheerios maker General Mills Inc. last year agreed to buy Annie’s, which sells everything from organic snacks and frozen foods to salad dressings and pastas, for about $820 million.
The deal, announced recently, would unite Hormel with an upstart that has poked fun at processed-food producers. Applegate has aired a series of TV commercials where a German-accented bodybuilder plays a cow, implying that its competitors’ products use growth hormones.
Applegate will operate as a standalone brand within Hormel, and some of the parent company’s workers will move to Bridgewater, New Jersey, where most of Applegate’s 100 employees are located.
Bloomberg News, edited by ESM
