Market Overview

Food Processing Names In Play As Hormel To Purchase Applegate Farms

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Shares of food processing stocks were in play Wednesday following a report that Hormel Foods Corp (NYSE: HRL) will buy natural and organic meat processor Applegate Farms LLC for approximately $775 million.

In a press release, Hormel CEO Jeffrey M. Ettinger said, “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. 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.”

The deal was expected to close within 60 days pending regulatory approvals.

Reuters noted that food companies were seeking to “shed artificial additives from their well-known brands to create healthier products.” For example, Tyson Foods, Inc. (NYSE: TSN) said in April that it would cease using human antibiotics in its chicken by 2017.

“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 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.”

Hormel Foods Corp was up 3.71 percent to $58.71 amid the news of the acquisition while other food processors fell.

Pilgrim's Pride Corporation (NASDAQ: PPC) traded at $26.23, down 2.87 percent, and Sanderson Farms, Inc. (NASDAQ: SAFM) dipped to $84.08, down 0.43 percent.

Tyson Foods, Inc. also moved lower Wednesday, down 0.65 percent to $42.86.

Posted-In: Applegate Farms Jeffrey M. Ettinger Reuters Stephen McDonnellLong Ideas M&A News Trading Ideas

 

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