Hormel Foods Corporation, an American food company, has reportedly announced plans to acquire Sadler’s Smokehouse, a firm that delivers premium and authentic pit-smoked meats for foodservice as well as retail consumers.

Jim Snee, Chief Executive Officer, Chairman of the Board, and President of Hormel Foods, states that Sadler’s Smokehouse is a great firm with a talented team, impressive history, and an outstanding on-trend product portfolio that resonate with customers, consumers, and operators.

This is a strategic acquisition for a food service business, and it gives the company another exceptional brand to expand into the deli and retail channels.

Sources cite that Sadler’s Smokehouse will continue to function in Henderson, Texas and it will report into the refrigerated foods segment. The acquisition, structured as an asset sale, is anticipated to close in March 2020.

From the past two decades, Hormel Foods has been a client of Sadler’s Smokehouse. According to the company, authentic barbeque is trending and continuously showing advancing growth on restaurant menus nationwide. This move is in line with the company’s strategic initiative of strengthening market leadership in foodservice and offer a quality product line.

Hormel Foods is also looking forward to further expand the Sadlers product portfolio into the retail and deli channels. The company is pleased to welcome Sadlers Smokehouse employees to the Hormel Foods family and looking forward to their fruitful contributions.

However, the deal is anticipated to be neutral to somewhat negative to fiscal 2020 earnings, as Hormel Foods plans to make instant investments into the production facility and the business. Apart from transfers to Hormel Foods, annual sales are around USD 140 million. The acquisition price is USD 270 million, and the company is planning to fund the procurement with cash on hand.

Jim Snee added that the firms refrigerated foods business performed as projected on account of volatile commodity market scenarios. Moreover, this growth was driven by strong quarter from the firm’s foodservice team and higher commodity revenues.

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