Smithfield Foods Set to Acquire Nathan’s Famous for $450 Million

In a strategic move to enhance its market presence, Smithfield Foods has announced a merger agreement to acquire Nathan’s Famous Inc. for $102 per share in cash, marking an enterprise value of approximately $450 million.

Securing the Nathan’s Famous Brand

This acquisition will grant Smithfield indefinite rights to the renowned all-beef hot dog brand. Smithfield has previously operated under an exclusive licensing agreement since March 2014, allowing the company to manufacture, distribute, market, and sell Nathan’s Famous products across retail channels in the U.S., Canada, and Sam’s Clubs in Mexico. However, this license was set to expire in March 2032.

Leadership Insights

Smithfield President and CEO Shane Smith expressed his enthusiasm about the acquisition. He stated, “The Nathan’s Famous acquisition is a meaningful step in the progression of Smithfield Foods, allowing us to own all of the top brands in our Packaged Meats portfolio and unlock new growth opportunities for our largest segment.”

Under the licensing agreement established in 2014, Smithfield invested significantly to promote the Nathan’s Famous brand. With its extensive manufacturing capabilities, marketing strength, and innovation potential, Smithfield aims to elevate the brand to new heights following the acquisition.

Transaction Overview

This merger represents a valuation of around 12.4 times Nathan’s Famous’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) based on the last 12 months, as well as a multiple of about 10 times post-synergies. Smithfield anticipates achieving annual cost synergies of approximately $9 million by the second anniversary of the deal’s closing.

Importantly, this acquisition will be immediately accretive to Smithfield’s adjusted diluted earnings per share, with financing contingencies absent, as it will be funded through cash on hand.

Board Approval and Shareholder Support

The board of directors at Nathan’s Famous has unanimously approved the merger agreement, recommending that shareholders endorse the transaction. Key members of the Nathan’s Famous board, holding about 29.9 percent of outstanding shares, have committed to vote in favor of the deal.

Strategic Growth Opportunities

Commenting on the union, Eric Gatoff, CEO of Nathan’s Famous, noted, “As a longtime partner, Smithfield has demonstrated an outstanding commitment to investing in and growing our brand while maintaining the utmost quality and customer service standards.”

This acquisition is poised to strengthen Smithfield’s growth trajectory by ensuring long-term sales and cash flows from the iconic Nathan’s Famous brand. It aims to drive growth within the high-margin packaged meats segment and boost foodservice sales by placing management under Smithfield’s direction.

Nathan’s Famous products are currently distributed across all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and 21 foreign countries through a robust restaurant system, foodservice sales programs, and various licensing initiatives.

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