The proposed transaction is expected to close in the second calendar quarter of 2021, subject to regulatory review and approval. The acquisition includes the Planters, NUT-rition, Planters Cheez Balls and Corn Nuts brands. Hormel Foods will acquire the business for $3.35 billion in cash in a transaction that provides a tax benefit valued at approximately $560 million, equating to an effective purchase price of $2.79 billion.
"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,” said Jim Snee, chairman of the board, president and chief executive officer of Hormel Foods.
"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 said. "We also expect significant synergies as we integrate this business into our One Supply Chain and Project Orion system."
The Planters snack nut portfolio net sales were approximately $1 billion in 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 $50-60 million to be realized by 2024. The acquisition includes three dedicated production facilities located in California, Arkansas and Virginia.
"The acquisition of the Planters branded business further demonstrates our disciplined financial approach to M&A," said 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."
Citi and Credit Suisse are acting as financial advisors to Hormel Foods and Faegre Drinker Biddle & Reath is serving as legal counsel.
“This is another momentous step in our rapid transformation of Kraft Heinz,” said Kraft Heinz CEO Miguel Patricio. “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.”
Both companies involved in the transaction are diversified food companies with a strong presence in the turkey industry. According to the WATTPoultry.com Top Companies Database, Jennie-O Turkey Store, a Hormel Foods subsidiary, is the second largest turkey producer in the United States, while Kraft Heinz ranks as the country’s sixth largest poultry producer.