Austin, Minnesota-based Hormel Foods Corp. has entered into a definitive agreement to acquire Columbus Manufacturing Inc., a deli meat and salami company, from Chicago-based Arbor Investments. Hormel says this strategic acquisition positions it as a total deli solutions provider and enhances its other deli brands, such as Hormel, Jennie-O, Applegate and DiLusso.
“We are pleased to add Columbus to the Hormel Foods family. Columbus has an outstanding reputation in the food industry and is well-positioned in the advantaged retail deli category,” said Jim Snee, president and CEO at Hormel. “Columbus is capitalizing on one of the fastest-growing areas in the retail grocery store with premium, authentic products that are on-trend with today’s consumers who are looking for unique experiences, flavors and products.”
“The acquisition of Columbus will serve as a catalyst for uniting all our deli businesses into one customer-facing organization,” Snee said. “This acquisition significantly enhances our scale in the deli by broadening our portfolio of products, customers and consumers. The synergies we can unlock with this acquisition are clear, and I’m excited for the next evolution of our company.”
“As a Millennial-focused brand, Columbus has generated category-leading growth through a passionate commitment to quality, simplicity and time-honored recipes,” said Joe Ennen, Columbus CEO. “In Hormel we are joining an organization whose values and culture perfectly align with our own.”
The purchase price is approximately $850 million. Total annual sales are approximately $300 million, with an expected growth rate in excess of 5 percent. Hormel Foods expects this acquisition to be modestly accretive to earnings per share in fiscal 2018. Full-year accretion in fiscal 2019 is expected to be between 6 to 8 cents per share.
Columbus will continue to operate from California and will report into the refrigerated foods segment. The transaction is subject to customary closing conditions, including the receipt of regulatory approvals in the U.S.
Hormel Foods provided further comments about this deal during a conference call on Tuesday, Oct. 31. An audio replay of the call will be available online at investor.hormelfoods.com for one year.