Jul 23, 2014
Home| Tools| Events| Blogs| Discussions| Sign UpLogin

CornCollegeBanner home

Hormel to Buy Muscle Milk Maker CytoSport for $450 Million

July 1, 2014
 
 

"With Muscle Milk, you get the leading share player in a significant growth category." Hormel CEO says.

 

July 1 (Bloomberg) -- Hormel Foods Corp. agreed to buy Muscle Milk maker CytoSport Holdings Inc. for about $450 million to expand beyond Spam canned meat into the kind of protein younger generations crave -- the ready-to-drink bottled version.

CytoSport’s sales in 2014 are expected to be approximately $370 million, Austin, Minnesota-based Hormel said in a statement yesterday. Hormel forecast the acquisition to add about 5 cents a share to earnings in fiscal 2015, with a neutral impact to earnings in the current fiscal year, including transaction costs.

Hormel’s product line is dominated by the likes of its namesake chili, Dinty Moore Beef Stew, Skippy peanut butter and ready-to-heat Don Miguel Mexican Foods. Muscle Milk will complement a line of meat and cheese wraps for young consumers called Rev that the company introduced in 2013, Chief Executive Officer Jeffrey M. Ettinger said in a telephone interview.

"This acquisition builds upon our strength in protein but also allows us to diversify our product portfolio," Ettinger said. "With Muscle Milk you get the leading share player in a significant growth category."

CytoSport, owned by the founding Pickett family and private equity firm TSG Consumer Partners LLC, introduced Muscle Milk in 2000. The ready-to-drink bottled version, which is distributed by PepsiCo Inc., is the market leader ahead of Core Power, owned by Chicago-based Fairlife LLC and distributed by stakeholder Coca-Cola Co.

Protein Rich

CytoSport gets Hormel "further into the realm of portable protein-rich items," Ettinger said. "The entire product line for Muscle Milk in the ready-to-drink form does satisfy this kind of immediacy that consumers are looking for."

Hormel also will get better access to specialty stores like General Nutrition Centers Inc. and convenience retailers, he said.

Protein has been at the center of other food deals this year, including Tyson Foods Inc.’s June offer to pay $7.7 billion for sausage-maker Hillshire Brands Co. In April, Post Holdings Inc. agreed to buy Michael Foods Inc. for $2.45 billion.

Ettinger said Hormel remains willing to take on as much as $2 billion in debt to do more deals. Hormel declined 0.3 percent to $49.21 at 10:05 a.m. in New York. The shares gained 9.3 percent this year before today.

The company’s agreement to buy Benicia, California-based CytoSport is subject to conditions, including the receipt of regulatory approvals, and is expected to close within 30 days, according to the statement. Bank of America Merrill Lynch advised Hormel on the deal.

See Comments

RELATED TOPICS: Dairy, Dairy Products

 
Log In or Sign Up to comment

COMMENTS

No comments have been posted



Name:

Comments:

 
 
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions