Industry
Kraft Heinz Co. said Thursday it plans to sell its nut business – which includes mostly Planters and Corn Nuts products – to Hormel Foods Corp. for US $ 3.35 billion, raising shares up 6per per cent.
PHOTO FILE: The company logo for Hormel Foods is displayed on a floor screen at the New York Stock Exchange (NYSE) in New York, USA, October 9, 2019. REUTERS / Brendan McDermid / Photo File
NEW YORK: Kraft Heinz Co. said on Thursday that it plans to sell its nuts business: importing most of Planters and Corn Nuts products: to Hormel Foods Corp. for US $ 3.35 billion, adding shares up 6per percent.
The Chicago-based company has been trying to streamline its portfolio and focus on more advanced brands, after years of criticism of its brand. miss out to private label products because it is in too many categories to focus on major brands. In September, Kraft Heinz said it would sell the natural cheese business to French dairy company Groupe Lactalis for US $ 3.2 billion.
“Plants are one of the most heavily branded private label brands in our portfolio. It is also, of course, affected as a commodity,” CEO Miguel Patricio said in a statement.
“We need to focus on areas where we can see the greatest competitive advantage. “
Patricio said in an interview with Reuters that Planters’ contract gives Kraft Heinz the flexibility to invest in, invest in or pay down debt. He declined to comment on the brands Kraft Heinz wants to buy but said the company is “not in any compromise at the moment. “
Kraft Heinz’s nut industry contributed about US $ 1.1 billion to net sales in 2020.
The agreement, which is expected to close in the first half of 2021, introduces global intellectual property rights to the brands, subject to existing third-party licenses.
Kraft Heinz also beat analysts ’estimates Thursday for fourth-quarter revenue as pandemic-locked-in people over the holidays bought more packaged groceries such as Mac and Cheese, Heinz ketchup and Oscar meat chips. Meyer.
“No major-cap food company has benefited more from the COVID era than Kraft Heinz, with strong unstoppable sales growth and much-needed equilibrium record relief,” Evercore ISI analyst David Palmer wrote in a recent note .
Sales grew 6.2per percent to US $ 6.94 billion in the three months ended Dec. 26, surpassing the average estimate of US $ 6.82 billion, according to Refinitiv data.
Improved net earnings rose to 80 cents per share from 72 cents a share a year earlier, beating estimates of 74 cents per share.
(Reporting by Richa Naidu in New York; edited by Jason Neely and Steve Orlofsky)