Hormel Foods Corporation (NYSE: HRL), one of the nation’s largest manufacturers and marketers of consumer-branded meat and food products, today announced it has reached a definitive agreement to acquire The Turkey Store Company, headquartered in Barron, Wis. Hormel Foods will purchase all of the outstanding shares of The Turkey Store Company for $334.4 million in cash, subject to adjustment for outstanding indebtedness and changes in working capital at closing. This is the largest acquisition in the history of Hormel Foods Corporation.
“We welcome The Turkey Store Company to the Hormel Foods family,” said Joel W. Johnson, chairman of the board, president and chief executive officer of Hormel Foods. “The Turkey Store is an extremely well-run company with strong brands and an excellent record of efficient production. We can learn a lot from The Turkey Store and it from Jennie-O Foods, our turkey business. We can strengthen both companies by bringing them together. This combination offers significant synergies, and we expect it to be immediately accretive.”
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The Turkey Store Company is a leading producer, processor and marketer of fresh and cooked turkey products, marketed principally under The Turkey Store brand and available nationwide in grocers’ fresh meat cases, delis and foodservice operations. With processed tonnage of 375 million pounds and annual sales of approximately $309 million for the fiscal year ended in February 2000, The Turkey Store Company is the sixth largest turkey operation in the United States. Hormel Foods will merge The Turkey Store Company, a family- and employee-owned company, into its wholly owned subsidiary, Jennie-O Foods, headquartered in Willmar, Minn. Jennie-O Foods is the world’s largest turkey processor, having processed more than 865 million pounds last year. With the acquisition of The Turkey Store Company, Hormel Foods will process more than 1.2 billion pounds of turkey annually and strengthen its position as an industry-leading provider of branded, value-added turkey products. Hormel Foods, including Jennie-O Foods and The Turkey Store Company, will employ more than 14,700 people, including 7,800 in Minnesota and 2,200 in Wisconsin.
Johnson said the transaction brings together the two best turkey companies in the United States. “The Turkey Store Company is a top-performing business in every respect. The Turkey Store brand’s number one position in fresh boneless retail products complements our Jennie-O brand’s strong presence in the further-processed retail, foodservice and deli areas. The combination creates the industry’s most extensive line of branded turkey products and enables us to be an even more complete supplier to our customers, resulting in improved logistics and customer service. We were also attracted to The Turkey Store Company because it, like our Jennie-O Foods subsidiary, is based in the Upper Midwest where turkeys grow very well on the best and least cost grains available in this country. We anticipate accelerated revenue growth and significant cost synergies as a result of this transaction and the subsequent integration of the Jennie-O Foods and The Turkey Store Company operations.”
Benefits from the acquisition are expected to include:
- Formation of the industry’s most complete supplier of high-quality, branded turkey products, enjoying the broadest distribution across the retail, foodservice and deli channels;
- Opportunity to extend the Jennie-O and The Turkey Store brands into new distribution channels;
- Cost synergies in live production through improved egg, poult and tom production;
- Increased manufacturing scale and improved capacity utilization;
- Complementary use of raw materials resulting in less commodity product and byproduct per pound of processed turkey — the Jennie-O Foods portfolio uses more breast meat and The Turkey Store Company more dark meat;
- Exchange of patented and proprietary equipment and systems improving manufacturing efficiency;
- Improved administrative efficiency;
- Accelerated new product introductions through combined research and development programs, and
- Geographically proximate operations facilitating the efficient combination of management and production.
Jerry K. Jerome, chairman and chief executive officer of The Turkey Store Company, said combining his business with Hormel Foods and its Jennie-O Foods subsidiary creates new opportunities to grow The Turkey Store brand. “Hormel Foods and Jennie-O Foods enjoy an outstanding reputation and strong relationships with retail, deli and foodservice customers that represent valuable additional distribution channels for our products. Combining our companies promises to strengthen both franchises. My management team and I have longstanding respect for Hormel Foods and Jennie-O Foods, and we look forward to joining them.”
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By GlobalDataAfter closing, Jerry Jerome will become chairman and chief executive officer of the Jennie-O Foods Turkey Store subsidiary of Hormel Foods. “His more than 25 years experience in the turkey industry will be an important element in ensuring the successful integration of The Turkey Store Company into the Hormel Foods family and the continued growth and success of the combined turkey business,” said Johnson. In consideration of Jerome’s ongoing role, he and Hormel Foods will enter into a five-year employment agreement and an incentive compensation plan, under which certain incentive compensation will be paid annually, contingent upon his continued employment and the achievement of certain operating income thresholds, which would accompany extraordinary performance of the combined Jennie-O Foods Turkey Store business. Jeffrey M. Ettinger, current president of Jennie-O Foods, will serve as president and chief operating officer of the combined business. Earl B. Olson, founder of Jennie-O Foods and current chairman, will become chairman emeritus of Jennie-O Foods Turkey Store. The headquarters of the combined turkey business will be in Willmar, Minn.
Certain regulatory approvals have already been received, including necessary clearances under the Hart-Scott-Rodino Act, and the transaction is expected to close by March 1, 2001. Goldman, Sachs & Co., New York, N.Y., acted as financial advisor to Hormel Foods with Houlihan Lokey Howard & Zukin, Chicago, Ill., handling this function for The Turkey Store Company. Dorsey & Whitney LLP, Minneapolis, Minn., acted as external legal counsel to Hormel Foods. Michael Best & Freidrich LLP, Madison, Wis., provided external legal counsel to The Turkey Store Company.
About The Turkey Store Company
The Turkey Store Company is one of the nation’s largest fully integrated turkey operations, managing all stages of turkey production from breeding, hatching, feeding and growing to processing and marketing of turkey products. The company operates a processing facility, a feed mill, a hatchery and growing farms in Barron; another processing facility in Faribault, Minn.; feed mills in Medford and Northfield, Minn., and growing farms throughout northwest Wisconsin and southern Minnesota. The Turkey Store Company employs more than 2,500 people, including 1,800 in Barron.
The Turkey Store Company produces and markets products in three categories:
- Retail Fresh. The Turkey Store Company offers the most extensive variety of fresh turkey sold in grocers’ fresh meat cases. The Turkey Store brand is the leading brand of fresh boneless turkey in the U.S. Products include ground turkey, breast slices, breast tenderloins, breast roasts, dinner sausages, ground breast meat and seasoned cuts.
- Deli. The Turkey Store Company offers leading deli products under The Turkey Store and Norwestern brands which consist primarily of cooked turkey used for slicing in deli operations.
- Foodservice. The Turkey Store Company’s foodservice offerings include a combination of products sold in the retail and deli segments.
About Jennie-O Foods
Jennie-O Foods, a wholly owned subsidiary of Hormel Foods, is based in Willmar, Minn. It operates eight plants in six central and western Minnesota towns — Willmar, Pelican Rapids, Melrose, Montevideo, Marshall and Golden Valley. Jennie-O Foods also has four feed mills, a laboratory, an experimental farm, two hatcheries and 74 corporate farms across the state. It employs more than 4,500 people, all of them in Minnesota.
Jennie-O Foods produces more than 400 items, including the traditional frozen whole bird, a two-pound roast with gravy, turkey breasts, turkey sausage, wieners, bacon and hams. Jennie-O Foods was acquired by Hormel Foods Corporation in December 1986. Since 1986, Jennie-O Foods has grown from the sixth largest turkey processor to its current status as the largest in the world. The company, founded in 1949 by Earl B. Olson and named after a daughter, celebrated its 50th anniversary in 1999.
About Hormel Foods Corporation
Hormel Foods Corporation is located in Austin, Minn., and is one of the nation’s largest manufacturers and marketers of consumer-branded meat and food products. It reported sales of $3.7 billion for the fiscal year ended October 28, 2000. Products include hams, bacon, sausages, franks, canned luncheon meats, stews, chilies, hash, meat spreads, shelf-stable microwaveable entrees, frozen processed foods and a variety of ethnic cuisine foods such as Mexican salsas, Asian vegetable oils, marinades and sauces, Mediterranean-based couscous, processed olives and peppers, Indian lentils, chutneys and curry pastes and Italian olive oils.
These products are sold to retail, foodservice and deli operations under a number of well-known and valuable trademarks, including Hormel, American Classics, Always Tender, Black Label, Bread Ready, Carapelli, Chi-Chi’s, Cure 81, Curemaster, Di Lusso, Dinty Moore, Dubuque, El Torito, Fast ‘N Easy, Herdez, Herb-Ox, Homeland, House of Tsang, Jennie-O, Kid’s Kitchen, Layout Pack, Light & Lean, Little Sizzlers, Marrakesh Express, Mary Kitchen, Old Smokehouse, Patak’s, Peloponnese, Range Brand, Rosa Grande, SPAM, Stagg and Wranglers.
The company’s Corporate Offices, Research & Development Center and flagship plant are all located in Austin. Company facilities that manufacture meat and food products are located in Algona, Fort Dodge, Knoxville and Osceola Iowa; Atlanta, Ga.; Beloit, Wis.; Wichita, Kan.; Fremont, Neb.; Oklahoma City, Okla.; Houston, Texas; Rochelle, Ill., and Stockton, Calif.
Forward-Looking Statements
This news release contains forward-looking statements based on management’s current views and assumptions. Actual events may differ. Statements regarding the expected benefits of the transaction are subject to the following risks: that expected benefits will not be achieved or may be delayed; that revenues following the acquisition will be lower than expected; that the businesses will not be integrated successfully or in a timely manner; the inability to successfully identify, develop and market new products and services; increased competition and its effect on the combined companies; that general economic conditions, either nationally or in the states in which the combined companies will be doing business, will be less favorable than expected; the general risks associated with the companies’ business, including the inability to forecast accurately the future costs of grain and the future availability of labor in the geographic locations in which the business operates; and that legislation or regulatory changes adversely affect the businesses in which the combined companies would be engaged. Forward-looking statements included in this press release speak only as of the date hereof.
