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Hillshire to Buy Golden Island

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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 - Free Report) acquisition of Pirate Brands in July and The J. M. Smucker Co.’s (SJM - Free 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 - Free Report) continued its series of acquisitions with the takeover of 20 Hostess Bakeries and 5 Bread Brands in July this year.

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