Hormel Foods is spinning off its Justin’s brand of nut butters and chocolate snacks through an investment agreement with Forward Consumer Partners.
In a transaction that is expected to close by the year-end, the New York-based private-equity firm is taking a 51% stake in Justin’s, which will become a standalone company with a new CEO.
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Hormel Foods will retain a 49% interest, according to a statement, which did not disclose the financial terms of the deal.
John Ghingo, the president of Minnesota-headquartered Hormel Foods, said the Justin’s brand has always had “incredible equity” and “there is even more opportunity ahead”.
Justin’s was founded in 2004 by Justin Gold, who sold a minority interest to private-equity firm VMG Partners in 2013. Hormel Foods, the owner of the Skippy peanut butter brand, then acquired Justin’s in 2016.
Since then, Ghingo said Hormel Foods has broadened the portfolio to cover almond and peanut butters and has also introduced peanut and almond butter cups.
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By GlobalDataHe added: “This new partnership with Forward will build on that strong foundation, providing even greater focus and resources to help the business grow – while we remain invested in its success.
“It also reflects a broader strategy at Hormel Foods of finding creative ways to unlock the potential of all of our brands.”
Gold will return as a strategic adviser at Justin’s and join its board.
Meanwhile, Peter Burns will return to the business as CEO, a position he held back in 2016. Burns has also served in executive roles at Hershey, Mauna Loa Macadamia Nut Corp., Izze Beverage, and Hain Celestial.
Matt Leeds, Forward’s founder and managing partner, will become chairman of the new standalone company.
Leeds commented: “The Justin’s brand is a textbook Forward asset – a powerful brand that makes beloved products, with an enduring track record of success and significant untapped potential.”
Alongside the Justin’s plan, Hormel Foods said Paul Kuehneman has been appointed interim CFO, reporting to CEO Jeff Ettinger.
Ettinger replaced Jim Snee in June as the former CEO announced his retirement. However, Ettinger’s position is temporary until a successor is found.
While Hormel Foods has not yet issued its fourth-quarter results to 26 October, the company did provide an update.
It expects a “strong” top line amid “sustained demand across its retail, foodservice and international businesses”, led by turkey products and the Planters snacks brand.
Net sales for the quarter are projected at the upper end of its guidance, while adjusted earnings per share are forecast around $0.08 to $0.09 below its previous expectations.
The outlook provided at the third-quarter stage in August was for sales of $3.15-3.25bn, which would represent organic growth of 1-4%. Diluted EPS was estimated at $0.36-0.38 and on an adjusted basis $0.38-0.40.
Projections for some metrics for the full-year were also lowered in August. The Spam maker said operating income would come in at between $982m and $996m, down from its previous forecast of $1.12bn to $1.19bn.
The company had forecast diluted EPS of $1.49 to $1.59 but the outlook was also cut to $1.49 to $1.59.
