The acquired business contributed approximately $1.1 billion to Kraft Heinz’s net sales last year
Global food company Hormel Foods Corporation announced today it is acquiring the Planters snack nut portfolio from the Kraft Heinz Company in a transaction expected to close in the second quarter.
The deal includes the Planters, NUT-rition, Planters Cheez Balls and Corn Nuts brands, as well as three dedicated production facilities located in Fresno, California; Fort Smith Arkansas; and Suffolk, Virginia, which will continue to operate as usual.
The consideration is $3.35 billion in cash in a transaction providing a tax benefit of approximately $560 million, equating to an effective purchase price of $2.79 billion.
Kraft Heinz stated the business being sold contributed approximately $1.1 billion to its net sales last year, primarily in the US segment. Hormel Foods said sales of the brand are expected to grow at the company’s long-term organic growth target. Operating margins are expected to be accretive to the grocery products business in 2022 and enhance margins and cash flows for the total company. Hormel Foods stated that it expects to attain synergies of approximately $50-60 million to be realised by 2024.
Jim Snee, president, chairman and chief executive officer of Hormel Foods, said: “Planters is an iconic leading snack brand with universal consumer awareness. The acquisition of the Planters business adds another $1 billion brand to our portfolio and significantly expands our presence in the growing snacking space. The Planters brand enhances our portfolio built for individual and social snacking occasions, and perfectly complements our snacking brands such as Hormel Gatherings, Columbus, Justin’s, Skippy, Herdez and Wholly. This acquisition also meaningfully broadens our scope for future acquisitions in the snacking space.”
Jim Sheehan, executive vice-president and chief financial officer of Hormel Foods, added: “The acquisition of the Planters branded business further demonstrates our disciplined financial approach to M&A. We expect this acquisition will responsibly leverage our balance sheet and will not compromise our disciplined capital allocation policy, especially our commitment to dividend growth.”
Kraft Heinz chief executive Miguel Patricio, commented: “This is another momentous step in our rapid transformation of Kraft Heinz. It will enable us to sharpen our focus on areas with greater growth prospects and competitive advantage for our powerhouse brands. Within our real food snacking platform, this means more aggressively driving real fuel for kids through lunchables and real meal alternatives like P3.”
Kraft Heinz chief financial officer Paulo Basilio said: “This is a great example of using agile portfolio management to improve our growth trajectory. As we move forward, we plan to continue deleveraging as we explore accretive investments to accelerate our strategy.”
Citi and Credit Suisse was financial advisor to Hormel Foods and Faegre Drinker Biddle & Reath was legal counsel. Perella Weinberg Partners was the exclusive financial advisor to Kraft Heinz, while Gibson, Dunn & Crutcher was its legal advisor.
Hormel Foods is based in Austin, Minnesota; Kraft Heinz Company is headquartered in Chicago.
Date published: 11 February 2021