Hormel Acquiring Muscle Milk

Deal with CytoSport will create major protein, sports nutrition brand platform

Published in CSP Daily News

Muscle Milk Hormel (CSP Daily News / Convenience Stores)

AUSTIN, Minn. --Hormel Foods Corp. has entered into a definitive agreement to acquire CytoSport Holdings Inc., maker of Muscle Milk products.

As a leading provider of premium protein products in the sports nutrition category, CytoSport's brands align with the company's focus on protein while further diversifying the Hormel Foods portfolio. The deal will create one of the foremost protein and sports nutrition brand platforms with extensive domestic and international reach.

Based in Benicia, Calif., CytoSport was founded in 1998 by the Pickett family, and produces Muscle Milk products, a leading brand in the ready-to-drink protein beverage category.

Total 2014 annual sales are expected to be approximately $370 million. The purchase price is approximately $450 million. Hormel Foods expects this acquisition to provide about 5 cents per share accretion 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 M. 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."

CytoSport chairman and founder Greg Pickett said, "Over the last 15 years, we've developed one of the strongest brands in the industry and built an entirely new protein beverage category with Muscle Milk. This next step in the company's growth story will enable CytoSport to continue its leadership role in the industry and be a part of a global company with greater resources. My family is extremely proud of where the company sits today and grateful to the passionate people who have been a part of this extraordinary adventure."

TSG Consumer Partners, CytoSport's strategic equity partner, is also selling its stake in the company.

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.

Hormel Foods, based in Austin, Minn., is a multinational manufacturer and marketer of consumer-branded food and meat products.