Meat products company
Hormel Foods Corporation
) recently announced its plans to acquire CytoSport Holdings, Inc.,
the renowned Muscle Milk producer. Valued at $450 million, the
transaction is subject to closing within 30 days. Based in Benicia,
CA, CytoSport is a partner company of the private equity firm TSG
Partner Companies, LLC.
For 2014, CytoSport is expected to generate revenues of $370
million. The company deals in brands including Muscle Milk,
CytoSport Monster, Cytomax and CytoSport. Muscle milk, CytoSport's
most famous product has been a huge success ever since its start in
2000. Due to high demand of the protein powder, the company
expanded its portfolio to ready-to-drink beverages and bars.
Hormel expects the acquisition to contribute 5 cents per share
to earnings in fiscal 2015. However, earnings per share, including
transaction costs in fiscal 2014 will not be affected.
Hormel intends to pursue further acquisitions in order to
increase its market presence. Past acquisitions have been steadily
benefiting the company through the last few quarters. These include
Skippy peanut butter acquired in Jan 2013 and also Skippy's China
business bought in fiscal first-quarter 2014 (ended Jan 26,
Hormel produces perishable meat products, which include fresh
meat, sausages, hams, wieners and bacon; poultry products that
comprise Jennie-O Turkey (JOTS) products; and shelf-stable
products, including canned luncheon meats, shelf-stable
microwaveable entrees, stews, chilies, hash, meat spreads, flour
and corn tortillas, salsas and tortilla chips.
With a market capitalization of $13.0 billion, Hormel holds a
Zacks Rank #4 (Sell). Some better-ranked stocks in the industry
Pilgrim's Pride Corporation
Sanderson Farms, Inc.
The Hillshire Brands Company
). While Pilgrim's Pride and Sanderson Farms sport a Zacks Rank #1
(Strong Buy), The Hillshire Brands holds a Zacks Rank #2 (Buy).
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HORMEL FOODS CP (HRL): Free Stock Analysis
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