Hormel sells Diamond Crystal Brands
Hormel Foods Corp. has entered into a definitive agreement to sell its Diamond Crystal Brands, Inc. business to an affiliate of Peak Rock Capital, L.L.C., an Austin, Texas-based private equity firm. Financial terms of the deal were not disclosed.
Founded in 1980, Diamond Crystal Brands manufactures and distributes portion-control and single-serve products for food service, including sauces, dressings, condiments, drink mixes, salt, pepper and sweeteners.
The transaction is subject to customary closing conditions and is expected to close in the second quarter of 2016. Hormel Foods will retain its Hormel Health Labs unit, which provides nutritional foods and beverages for those with special dietary needs.
For Peak Rock, the deal marks its fourth recent food-related investment. Others include Natural American Foods, a producer of honey; Berner Food & Beverage, a manufacturer of dairy-based shelf-stable snacks and beverages; and Highline Mushrooms, a producer and distributor of mushrooms in North America.
Diamond Crystal Brands “represents an exciting opportunity to invest in a leading middle market food and beverage company with a long-standing reputation for quality and service,” said Anthony DiSimone, chief executive officer of Peak Rock Capital. “The transaction highlights Peak Rock’s ability to efficiently execute complex corporate carve-outs, where we can leverage the extensive operational experience of our principals to effectuate a seamless company transition to a standalone entity, in order to further drive growth and operational improvements.”
Hormel Foods previously discussed plans to sell a portion of the Diamond Crystal Brands business during an earnings call this past November. In fiscal 2015, the company recorded pre-tax, nonrecurring charges of $21.5 million related to a goodwill impairment charge for the business, which is part of Hormel’s Specialty Foods segment.
“While the business is still performing acceptably, we feel it no longer fits within our strategic priorities,” said Jeffrey Ettinger, chairman and chief executive officer, during the call. “We will pursue a sale over the course of the next few months, allowing us to redeploy capital in investments that better support our growth goals.”
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