Food industry multinational Hormel Foods has entered into a definitive agreement to acquire CytoSport Holdings, maker of Muscle Milk and other sports nutrition products. In a release from Hormel it was noted that the transaction is subject to customary closing conditions, including the receipt of regulatory approvals in the United States, and is expected to close within 30 days.
As a leading provider of premium protein products in the sports nutrition category, CytoSport’s brands are seen to align with Hormel’s focus on protein while further diversifying the Hormel Foods portfolio.
Based in Benicia, California, CytoSport was founded in 1998 by the Pickett family, and produces Muscle Milk products, ‘the number 1 brand in the ready-to-drink protein beverage category’.
CytoSport is backed by private equity firm TSG Partners, which had reportedly hired Credit Suisse last summer to lead a potential initial public offering (IPO) for the company. The pending acquisition of CytoSport by Hormel Foods now clears up any uncertainty surrounding the business and its strategic direction.
Total 2014 annual sales are expected to be approximately US$370 million. The purchase price is approximately US$450 million. Hormel Foods expects this acquisition to ‘provide about 5 cents per share accretion [asset growth] in fiscal 2015, with a neutral impact to fiscal 2014 earnings, including transaction costs.’
“Muscle Milk products will serve as a growth catalyst for our Specialty Foods segment, providing this division with a leading brand in the high-growth sports nutrition category,” said Jeffrey Ettinger, Chairman, President and CEO at Hormel Foods. “The acquisition of CytoSport expands our offerings of portable, immediate, protein-rich foods, and broadens our appeal with younger consumers. Muscle Milk premium protein products further enhance our balanced business model.”
BofA Merrill Lynch is serving as exclusive financial advisor to Hormel Foods in connection with this transaction.
www.hormelfoods.com
www.cytosport.com
www.musclemilk.com
