US protein group Hormel Foods is to acquire chicken producer Brakebush Brothers from its family owners for approximately $1.05bn.
"The acquisition advances Hormel Foods' strategy of investing in growing protein categories, will meaningfully expand the company's position in value-added chicken, and is expected to strengthen its leading foodservice platform through enhanced operator relationships, category expertise and an expanded direct sales organisation," the company said in a statement.
Hormel’s branded chicken portfolio sold into retail includes Applegate, Hormel Natural Choice brands and Jennie-O turkey.
The deal for Brakebush follows a series of recent disposals, including its whole-bird turkey business announced in February, excluding Jennie-O.
Westfield, Wisconsin-based Brakebush was founded in 1925 and supplies the retail and out-of-home channels, in addition to B2B customers.
The family-owned company generated approximately $1.2bn in net sales over the last 12 months and operates five production facilities, along with two research and development laboratories, Hormel said.
John Ghingo, Hormel's president and incoming CEO, said: “Chicken has been one of the most attractive growth categories in protein, and Brakebush has built an exceptional platform to serve that demand.
“We believe that Brakebush will bolster our capabilities, bringing additional scale, expertise and customer reach, in support of our long-term growth strategy.”
Hormel, which also produces the Skippy peanut butter brand, named Ghingo as CEO in July to replace interim chief executive Jeff Ettinger.
Ettinger became the company's CEO on an interim basis last year following the retirement of Jim Snee as president and chief executive.
Ghingo is due to assume the role on 26 October, while both executives will remain on the board.
In June, Hormel agreed to sell its Brazilian business, including production operations under the Ceratti brand, to domestic food producer Zanchetta Alimentos.
In February, the company reached a deal to sell the whole-bird turkey operations in the US to Life-Science Innovations, which also excluded Hormel's wider range of turkey products.
In October last year, the company entered into an agreement with Forward Consumer Partners to separate its Justin’s nut butter and chocolate snacks business.
On Brakebush, Ettinger said the business is a “highly respected leader in value-added chicken” and its “talented team, strong culture and differentiated capabilities make it an excellent fit for Hormel Foods”.
The deal is expected to close in the first quarter of Hormel’s 2027 financial year, subject to regulatory approval and other customary conditions.
In August, Hormel lowered its full-year sales guidance as it reported third-quarter results.
Net sales are now expected to rise 1-2% on an organic basis, versus its earlier forecast of 1-4%, and will likely land in a range of $12.1-12.2bn.
At the same time, the company raised its adjusted operating income outlook to between $1.08-1.12bn and lifted adjusted earnings per share (EPS) guidance to $1.45-1.51, with both measures implying growth of 6% to 10%.
However, it cut its diluted EPS forecast to a range of $1.06-1.12 from $1.28-1.37.
