Back to top

Analyst Blog

Meat-oriented food solutions provider for the retail and foodservice markets, The Hillshire Brands Co. recently inked a definitive agreement to acquire Calif.-based Golden Island – one of the sought-after manufacturers of premium gourmet jerky products. Financial terms of the deal were not disclosed. The transaction is expected to be close by the end of Sep 2013.

Founded more than 50 years ago, Golden Island has significant experience in meat products and produces over 20 gourmet varieties. Further, products from the Golden Island Jerky brand use natural items and contain 40-60% less sodium than most other jerkies. Its innovative mode of preparation sets the brand apart from traditional jerkies and makes it a lucrative acquisition target.

We view the deal as strategically positive for both parties as they operate in the same vertical. Post acquisition, Golden Island will join Hillshire Brands’ Gourmet Food Group, teaming up with other premium brands like Aidells and Gallo. Post-acquisition, Golden Island will benefit from Hillshire’s much larger scale of operation.  

On the other hand, the Golden Island acquisition will open up opportunities for Hillshire Brands in the dried meat snacks category. This promising category generates retail sales of more than $2 billion annually and registered 10% volume growth over the past two years. However, Hillshire Brands does not expect this acquisition to have a considerable impact on earnings this fiscal year.

Hillshire Brands is not the only food company looking to expand inorganically. In the recent past, sell-offs and acquisitions have gained momentum in the foodservice industry. Of these, B&G Foods Inc.’s (BGS - Snapshot Report) acquisition of Pirate Brands in July and The J. M. Smucker Co.’s (SJM - Analyst Report) acquisition of organic and gluten-free ancient grain products maker Enray Inc. in August are worth mentioning. Another company in the same sector, Flowers Foods Inc. (FLO - Snapshot Report) continued its series of acquisitions with the takeover of 20 Hostess Bakeries and 5 Bread Brands in July this year.
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UNITED THER… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%