Hormel Snaps Up Some Texas Sizzle With Its $270 Million Sadler’s Smokehouse Buy
Adding some big barbecue flavor from the wide open spaces of Texas to its product lineup, Hormel Foods (NYSE: HRL) announced its acquisition of Sadler's Smokehouse on the same day it released its Q1 2020 results. The distinctive taste of barbecue is taking off right now, not only in the USA but worldwide, and Hormel appears determined to lasso some profits from the trend. At the same time, its Q1 earnings dipped because of a major divestiture, raising the question of whether Sadler's can counterbalance the sale's effects.
Feb. 20 was a busy day for Hormel, with the release of its fiscal Q1 2020 report and a same-day earnings call. Intertwined with its earnings report was the announcement of its deal to acquire privately held Sadler's Smokehouse for $270 million in cash. The acquisition, slated to close in March 2020, adds a brand specializing in genuine, traditionally made pit-smoked meats used in barbecue cuisine by restaurants to Hormel's refrigerated foods sector.
Outside of meat purchases by Hormel, one of its major customers for around 20 years, Sadler's Smokehouse generates approximately $140 million in net sales annually. During the Hormel Q1 earnings call, Chairman, President, and CEO James Snee expanded on how the Sadler's acquisition would help the company push aggressively into supplying foodservice customers with specialty barbecue meats. He noted that the rapid growth of the barbecue-related Austin Blues brand, already owned by the company, suggests that Sadler's will probably add value to Hormel, too.
Source Fool.com
