Hormel Foods could be on the verge of taking CVC Capital Partners minority stake in Indonesia’s GarudaFood Putra Putri Jaya.
The Spam and Skippy peanut butter brand owner is in advanced talks to acquire the private-equity firm’s interest, Bloomberg reported, citing people familiar with the proceedings.
It emerged from Reuters in August – also quoting unnamed sources – that CVC Capital had reportedly hired advisers to explore the sale of its 20% stake in the savoury snacks, confectionery, biscuits and dairy maker.
The Asian office of Luxembourg-based CVC Capital, which purchased the stake four years ago, declined to comment when approached by Just Food today (24 October). A response had not been received from GarudaFood or Hormel at the time of writing.
Hormel has outbid rivals for CVC Capital’s stake in a deal that could fetch a few hundred million dollars, Bloomberg’s sources said. The news agency said the private-equity house invested about $150m in GarudaFood back in 2018.
The Indonesian food business, which includes the Garuda, Gery and Chocolatos brands, also owns a 49% stake in a local venture with Hormel called Hormel GarudaFood Jaya.
Hormel reported its third-quarter and nine-month results in September. Year-to-date sales were up 15% at US$9.1bn on a GAAP basis, while net income was also 15% higher at $720.2m.
In fiscal 2021, sales climbed 19% to $11.39bn but net earnings were relatively flat at $909m. The majority of the company’s sales are made in the US. In fiscal 2021, Hormel said sales from its International & Other division – which also includes joint ventures and royalty deals – rose 20.9% to $748.2m.
Hormel is moving to three operating segments – Retail, Foodservice and International – on 31 October. Earnings will be reported under this structure beginning in the first quarter of its 2023 fiscal year.
Meanwhile, GarudaFood’s sales rose 14% last year to IDR8.8trn (US$590m). Its export sales were up 7.1% at IDR390.7m. Net profit more than doubled to IDR493bn.