Benicia, Calif.-based CytoSport makes protein-based supplements used by athletes and others seeking to build muscle mass. The company was founded in 1998 by father and son duo Greg and Michael Pickett, and is owned by the Picketts as well as private equity firm TSG Consumer Partners.
The Deal reported in November that CytoSport was on the auction block.
Austin, Minn.-based Hormel, which in addition to Spam makes chili, Skippy peanut butter and other ready-to-eat products, said that the purchase would help it appeal to a younger generation.
"The acquisition of CytoSport expands our offerings of portable, immediate, protein-rich foods, and broadens our appeal with younger consumers," company chairman and CEO Jeffrey M. Ettinger said in a statement. "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."
Hormel said it expects CytoSport to generate about $370 million in sales this year. Post-deal the Picketts are expected to remain involved in day-to-day operations.
CytoSport chairman Greg Pickett said "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."
TSG Consumer Partners, which was also an investor in vitamin water and Smart Balance among others, invested in CytoSport in 2007. Brian Krumrei, a managing director at the firm, said that during its involvement sales more than quadrupled. "This transaction represents an exceptional outcome for CytoSport, TSG Consumer Partners and Hormel Foods," Krumrei said. "We look forward to watching the company's continued success under new ownership."