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Analyst: Hormel could acquire Hillshire

Published 10:35am Tuesday, November 20, 2012

Hormel Foods Corp. has come up again as a company in position to acquire Hillshire Brands Co., the maker of Jimmy Dean sausages, Ball Park hot dogs and Sara Lee. reported last week that Hormel and Tyson Foods Inc. may find the newly formed company appealing while it trades 21 percent below its estimated value. Bloomberg said Hillshire, a $3.2 billion company, leads the U.S. in sales of hot dogs and sausages.

“It’s high margin. It’s less volatile in terms of profit. The [Hillshire] brands bring you more negotiating leverage with retailers,” said Alexia Howard, a New York-based analyst for Bernstein, according to Bloomberg.

Howard told Reuters in June a takeover is “fairly likely” and said Hormel and Tyson are in the best position to make that move based on the companies’ “strategic rationale for the deal as well as their financial capability.” Others, according to Howard, include Smithfield Foods Inc. and Brazil’s JBS and Brasil Foods, but are less likely.

Hillshire Brands is the result of a Sara Lee Corp. split. Sara Lee split into two companies in June, one in the U.S. called Hillshire Brands — which runs Sara Lee, Hillshire Farms, Jimmy Dean, Ball Park and other similar retail and food-service brands — and an international coffee and tea business called D.E. Master Blenders 1753, according to the Associated Press.

A Hormel Foods spokesperson said the company does not comment on mergers or acquisitions.

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