Hormel Foods closer to deal to acquire Kraft Heinz snack business Planters

Hormel Foods is reportedly closer to a deal to acquire Kraft Heinz’s 100-year-old snack brand Planters for about $3bn, as the former intends to diversify its product portfolio through acquisitions.

Citing sources aware of the matter, Wall Street Journal reported that the deal is likely to be announced by next week if the discussions do not fall apart.

In the recent years, Hormel has been diversifying from its core business of chilli and deli meat products, through acquisitions of firms as Sadler’s Smokehouse for $270m in 2020, Justin’s Nut Butters for $286m in 2016.

Kraft Heinz, formed following the 2015 merger between Kraft Foods and Heinz, has been divesting some brands as part of its multibillion-dollar cost-cut plan to boost its operations. In September, it agreed to sell its Natural, Grated, Cultured and Specialty business to France-based dairy firm Lactalis for $3.2bn.

In 2000, Kraft’s acquisition of Nabisco Brands brought the Planters nut brand into its portfolio and subsequently under Kraft Heinz after the 2015 merger of the two major brands.

Under the nuts, seeds category, Planters is a leading brand in the US holding close to 23% share in 2015. However, in 2020, it slipped to around 16%, due to competition from several private-label brands.

Hormel, which sells deli meats to restaurants, has seen a dip in food-service revenue due to Covid-19 pandemic and is looking at strengthening its balance sheet through acquisitions.