This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration. Need a new registration confirmation email? Click here
Food stocks are some of the biggest players in the M&A business, frequently buying and selling brands piecemeal or whole hog (pun intended) to build exposure to a particular type of packaged food product. That's why
Hormel Foods(HRL) makes our list of potential takeover targets. In addition to Hormel's eponymous label, the firm also owns household brands like Jennie-O, Spam and Country Crock.
Hormel is a meat stock. The firm earns more than half of its revenues in the fresh meats business, producing ham, bacon, and turkey for grocery stores across the country. Customers are more flexible about fresh meat prices than they are with shelf stable products. That fact gives Hormel considerable pricing power at the cash register. On the other side of the equation, vertical integration has helped Hormel keep its own costs lower. Because Hormel generally raises the animals that it sells, it's able to save costs and absorb more inflation in its cost of goods sold.
HRL's balance sheet looks attractive right now, with more than a billion dollars in cash and less than a quarter of that amount in debt. While a brand acquisition attempt is more likely than a buyer looking to takeover the whole firm, either scenario unlocks considerable value for shareholders.
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.