- James Snee, Hormel Foods Corp.’s president and CEO, said the company is looking for strategic acquisitions, according to Food Business News. “Our balance sheet is pristine, and so we do have the capacity to do a multibillion dollar deal,” he said.
- Snee said there was no particular target, but the company was searching for companies that “are aligned with our growth pillars for being more global, multi-cultural, healthy, holistic and on-the-go.”
- Hormel is searching for opportunities in the U.S. and internationally, with a focus on Asia and South America.
Hormel appears eager to buy, but James Snee, Hormel Foods' president and CEO, said any acquisition would have to be a company that is currently No. 1 or No. 2 in their respective category.
This means that companies such as Hain Celestial, long rumored to be an acquisition target by a large food manufacturer eager to expand its reach in the natural and organic space, could be considered. Hormel also recently announced it was going to concentrate more on the snack category, and companies that focus on this area could be prime acquisition targets as well.
In recent years, Hormel has been active in M&A with acquisitions of Applegate, Justin’s and Muscle Milk. These deals have given the company a stronger presence in fast-growing categories like natural and organic meats and nut butter snacks — helping the company post record highs in 2016. In its last earnings report, it showed record sales of $2.6 billion for the fiscal 2016 fourth quarter, a 9% increase year over year.
The proclamation that it's looking for more deals is hardly a surprise, but Hormel will need to be careful. It's likely that other food manufacturers, looking to jumpstart growth, will be eager to participate in M&A, too, creating the potential of overpaying. Just because Hormel wants to do a deal and has the resources to, doesn't mean that it should unless it's the right one.