Hormel to Buy Brakebush for $1.055 Billion, Expanding Value-Added Chicken

HRL agreed to acquire Brakebush Brothers, a family-owned, value-added chicken company headquartered in Westfield, Wisconsin, for approximately $1.055 billion, the company announced on September 30. Brakebush, founded in 1925, generated about $1.2 billion in net sales over the last 12 months, operates five production facilities and two research and development labs, and earns roughly 90% of its revenue from foodservice. Hormel will report it primarily in its Foodservice segment.

The price implies 10.7 times Brakebush's adjusted EBITDA, or 8.9 times after about $20 million of expected run-rate cost synergies by the end of fiscal 2028. Hormel plans to fund the deal with cash on hand and long-term debt, expects it to close in the first quarter of fiscal 2027, and expects it to be accretive to adjusted EPS beginning in fiscal 2028. MarketBeat's summary says chicken will grow from under 5% to about 13% of Hormel's protein portfolio.

The financing has a cost. S&P lowered Hormel to BBB+ from A- and Moody's cut its senior unsecured rating to A3 from A2, both with stable outlooks, as pro forma leverage rises to about 2.5 times at closing from 1.8 times, above management's 1.5 to 2.0 times target range, according to Investing.com. The deal continues a portfolio reshaping under president and CEO-elect John Ghingo, following Hormel's sale of its Brazilian business and its whole-bird turkey operations earlier this year.

What to watch: regulatory clearance and the closing timeline, Hormel's progress back toward its leverage target during fiscal 2027, and whether the synergy target holds. Barclays analyst Benjamin Theuer said the deal will likely strengthen Hormel's long-term growth profile and significantly increase its presence in chicken.