Hormel Foods acquires Planters snack business from Kraft Heinz
12 Feb 2021 --- Hormel Foods Corporation has entered into a definitive agreement to acquire the Planters snack nut portfolio from the Kraft Heinz Company.
Hormel Foods will acquire the business for US$3.35 billion in cash in a transaction that provides a tax benefit valued at approximately US$560 million, equating to an effective purchase price of US$2.79 billion.
The acquisition includes the Planters, NUT-rition, Planters Cheez Balls and Corn Nuts brands. It also includes three dedicated production facilities located in California, Arkansas and Virginia.
Portfolio expansion
“Planters is an iconic leading snack brand with universal consumer awareness,” says Jim Snee, president and CEO of Hormel Foods.
“The acquisition of the Planters business adds another US$1 billion brand to our portfolio and significantly expands our presence in the growing snacking space,”he continues.
“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.”
The Planters snack nut portfolio net sales were approximately US$1 billion in the calendar year 2020.This acquisition is pegged as a means of “meaningfully broadening” Hormel Foods’ scope for future acquisitions in the snacking space.
“Our competencies in brand stewardship, revenue growth management, e-commerce, innovation and consumer insights will be key to driving growth for the Planters brand and for our customers,” Snee adds.
“We also expect significant synergies as we integrate this business into our One Supply Chain and Project Orion system.”
Sales and growth
The Planters snack nut portfolio net sales were approximately US$1 billion in the calendar year 2020 and 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 expects to attain synergies of approximately US$50 to 60 million to be realized by 2024.
“The acquisition of the Planters branded business further demonstrates our disciplined financial approach to M&A,” says Jim Sheehan, executive vice president and chief financial officer of Hormel Foods.
“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.”
Edited by Gaynor Selby
