Hormel Foods Corporation is adding a “millennial-focused brand” of deli meat through the $850 million acquisition of a California-headquartered company.

Hormel announced on Tuesday that it has entered into a definitive agreement to acquire Columbus Manufacturing, Inc. — a deli meat and salami company — from Chicago-based Arbor Investments.

The acquisition positions Hormel Foods as a “total deli solutions provider and enhances its other strong deli brands such as Hormel, Jennie-O, Applegate and DiLusso, a Hormel news release said.

“We are pleased to add Columbus to the Hormel Foods family,” said Jim Snee, president and chief executive officer at Hormel Foods. “Columbus has an outstanding reputation in the food industry and is well-positioned in the advantaged retail deli category. 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 added. “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.”

Joe Ennen, chief executive officer of Columbus Manufacturing, Inc. said, “As a millennial-focused brand, Columbus has generated category-leading growth through a passionate commitment to quality, simplicity, and time-honored recipes. In Hormel we are joining an organization whose values and culture perfectly align with our own.”

The purchase price is approximately $850 million, according to the news release. Total annual sales are about $300 million with an expected growth rate in excess of 5 percent. Hormel Foods expects this acquisition to modestly increase earnings per share in fiscal 2018.

Full-year increases in fiscal 2019 is expected to be between 6 to 8 cents per share.

The company will continue to operate from California and will report into Hormel’s Refrigerated Foods segment. The transaction is subject to customary closing conditions, including the receipt of regulatory approvals in the United States. Hormel Foods was advised by Barclays and Faegre Baker

Daniels LLP. Columbus Manufacturing was advised by BofA Merrill Lynch and DLA Piper LLP (US). In addition, Rothschild provided financial advice toColumbus Manufacturing.

Columbus Manufacturing, Inc. was founded in 1917. It operates two production facilities in Hayward, California.

Hormel began 2017 by finalizing the sale of Clougherty Packing, LLC, owner of the Farmer John and Saag’s Specialty Meats along with PFFJ, LLC farm operations in California, Arizona and Wyoming to Smithfield Foods, Inc. The sale price was $145 million in cash.

In August, Hormel announced its acquisition of Chicago-based Fontanini Italian Meats and Sausages. The purchase added “much-needed production capacity for our pizza toppings business,” Snee said in the Hormel’s third-quarter earnings report.

Hormel also acquired the Brazilian meat company Cidade do Sol, which produces a variety of meats under the Ceratti brand. It was Hormel’s first foray into the South American market but is likely not its last. “This acquisition expands our global presence and is a platform for future acquisitions in South America,” Snee said in the report.