NEW YORK (TheStreet) -- Shares of Hormel Foods Corp. (HRL) are higher by 3.43% to $58.55 in after-hours trading on Tuesday, after the marketer and seller of a variety of meat and packaged foods announced it has agreed to acquire Applegate Farms LLC for approximately $775 million.
The acquisition allows the maker of Spam a secure position in the organic meats category, The Wall Street Journal reports.
"A growing number of consumers are choosing natural and organic products. This deal allows us to expand the breadth of our protein offerings to provide consumers more choice," company CEO Jeffrey Ettinger said in a statement announcing the deal.
Applegate will operate autonomously as a standalone subsidiary of Hormel's refrigerated foods unit. Hormel is expecting the acquisition to be neutral to its 2015 earnings but accretive by approximately 7 cents to 8 cents per share in fiscal 2016.
Hormel said the deal is expected to close within 60 days.
Separately, TheStreet Ratings team rates HORMEL FOODS CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate HORMEL FOODS CORP (HRL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels and good cash flow from operations. We feel its strengths outweigh the fact that the company shows low profit margins."