Dive Brief:
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Hormel Foods is reportedly interested in buying Jiahao Foods, a Chinese maker of wasabi, soy sauce and other Asian condiments, according to Bloomberg. The deal could be valued at $600 million.
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Currently owned by Hong Kong-based Unitas Capital, Jiahao Foods also has attracted interest from two other Chinese private equity firms, Hony Capital and Citic Capital, the news service said.
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Minnesota-based Hormel wouldn't say anything specific about the report, although a representative told Bloomberg, "We are constantly exploring opportunities throughout our business as well as outside of our organization, including growth through acquisitions."
Dive Insight:
Hormel has been operating in China since 1994 and last year opened a new factory there, so this acquisition wouldn't be a big geographic stretch. And though the company is known more for making protein products such as SPAM, bacon, deli meats and Skippy peanut butter, it's also interested in condiments — especially exotic, spicy and increasingly popular ones like wasabi.
Last year, Hormel was among the bidders for the food division of Reckitt Benckiser, the U.K.-based maker of French's mustard and Frank's RedHot sauce. McCormick ended up buying the unit for $4.2-billion deal.
Hormel has been been active in the M&A space in recent years by buying Muscle Milk in 2014, Applegate Farms in 2015, Justin's in 2016, and Columbus Manufacturing, Cidade do Sol and Fontanini last year. The common denominator for all these Hormel acquisitions is protein, so a condiment company would be a bit of a departure, even if a complementary one.
The company already owns the House of Tsang brand, which includes teriyaki and curry stir-fry and dipping sauces as well as cooking oils based in part on products developed by San Francisco chef David Tsang.
There are potential tie-ins should Hormel come out on the top in a possible bid to buy Jiahao Foods. Wasabi-flavored SPAM may not be out of bounds in today's world of increasingly experimental flavor combinations. Hormel already produces hot and spicy, teriyaki and jalapeño varieties.
In addition, Hormel's new factory in Jiaxing, China, makes traditional refrigerated pork items and produces SPAM, so there could be economies of scale and logistical advantages from a purchase of Jiahao Foods.
James Snee, Hormel's CEO, said that by 2020, Hormel's goal is to have 15% of net sales coming from products developed during the past five years. He also said the company is looking to expand its footprint in international markets, which account for 5% of its total revenue. These factors indicate why it may be looking to acquire Jiahao Foods and why similar deals could be on the horizon for Hormel.