The Minnesota-based food group Hormel Foods is to acquire the pepperoni producer Provena Foods for around US$16.8m.

The companies announced a definitive merger agreement whereby each share of Provena's common stock will be cancelled and converted into the right to receive 0.08 shares of Hormel Foods common stock. Including net assumed debt for borrowed money of approximately $6.2m and a price per share of Hormel Foods common stock of $37.50, the transaction has an enterprise value of approximately $16.8m.

The proposed acquisition has been approved by the boards of both companies but remains subject to customary closing conditions, including the approval of the Provena shareholders. The deal is expected to close by the end of the year.

"We are very excited about the opportunity to join our company with such an established name in the food industry," said Ted Arena, chairman and CEO of California-based Provena. "The merger will give Hormel Foods a West-coast production capacity and represents significant value to the Provena shareholders."