Minnesota-Based Hormel Buys Planters Brand For $3.35B

ACROSS MINNESOTA — Hormel Foods Corporation, a global branded food company headquartered in Austin, MN, announced Thursday hat it has entered into a definitive agreement to acquire the Planters® snack nut portfolio from the Kraft Heinz Company.

The proposed transaction is expected to close during the second quarter of 2021, subject to regulatory review and approval. The acquisition includes the Planters®, NUT-rition®, Planters® Cheez Balls and Corn Nuts® brands.

In a news release, Hormel Foods said it 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. This the largest acquisition in the Minnesota food company's 130-year history, according to the Star Tribune.

“Planters® is an iconic leading snack brand with universal consumer awareness,” said Jim Snee, chairman of the board, president and chief executive officer of Hormel Foods. “The acquisition of the Planters® business adds another $1 billion brand to our portfolio and significantly expands our presence in the growing snacking space.

According to Snee, the acquisition also broadens Hormel's scope for future acquisitions in the snacking space.

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.