Hormel Foods Corp (NYSE:HRL) is making its largest-ever acquisition with organic meat maker Applegate Farms LLC.
Hormel Foods has agreed to buy Applegate Farms for roughly $775 million. The deal is expected to close in the next 60 days and the meat maker will be a standalone subsidiary of HRL. The company doesn’t expect the acquisition to affect its EPS until next year, when it predicts it will increase earnings, reports The Wall Street Journal.
The acquisition of Applegate Farms by Hormel Foods is likely an effort on the latter’s part to better resonate with younger buyers. These buyers have shown a favor toward meats that aren’t organically processed. However, Applegate could lose popularity by being connected with Hormel, WSJ notes.
“Clearly, the natural and organic space is a dynamic and growing category,” Jeffrey M. Ettinger, CEO of Hormel Foods, told The New York Times. “We really look at it as a movement and not a fad, and the Applegate team has been a leader in that marketplace.”
HRL shares were up 3% as of Wednesday afternoon.
