Business Strategies / Capital Spending / Business / Industry News

Hormel Expands Foodservice, Buys Fontanini for $425M

By Lauren R. Hartman, Product Development Editor

Aug 18, 2017

Hormel Foods Corp., Austin, Minn., adds to its foodservice portfolio with the purchase of Chicago-based Fontanini Italian Meats and Sausages for $425 million, the company stated Aug. 17. Fontanini, a brand of Capitol Wholesale Meats, Inc., makes authentic Italian meats and sausages, and other premium meat products, including pizza toppings and meatballs for the foodservice sector.

Hormel, which makes products including Spam canned pork and Skippy peanut butter, said it bought Fontanini to leverage key Hormel Foods resources such as R&D, operations, supply chain and finance to grow the "dynamic business."

"This is a strategic acquisition for our high-growth foodservice division," said Hormel president and CEO Jim Snee. "We have delivered a strong track record of success in the foodservice industry … The Fontanini brand is highly regarded, and the addition of these products to our portfolio will allow us to accelerate growth for both Hormel Foods foodservice and for Fontanini through expanded distribution and new customers."

Fontanini will continue operations out of their Chicago metropolitan area facilities and will report into the refrigerated foods segment. The transaction was structured as an asset sale with a purchase price of $425 million, subject to customary working capital adjustments.

"Hormel Foods has an excellent reputation as one of the strongest food companies in the world with a track record of successfully acquiring family-owned businesses like ours," said Gene Fontanini, CEO of Capitol Wholesale Meats. "This acquisition will allow Fontanini to strengthen under the Hormel Foods umbrella given its leadership in retail combined with our shared leadership in foodservice."

Hormel said it will discuss the acquisition during its third-quarter earnings call on Aug. 24. Fontanini will report into Hormel's Refrigerated Foods segment.