Oscar Mayer, the hot dog and deli business of packaged food giant Kraft Heinz. (Disclosure)
THE JBS (JBSS3) and Mexico’s Sigma Alimentos are among those vying to acquire Oscar Mayer, the packaged food giant’s hot dog and deli business Kraft Heinzaccording to people familiar with the matter.
The divestiture of the popular hot dog brand, which sources say could bring in nearly $3 billion, would come as Kraft Heinz seeks to reorganize its portfolio to focus on healthier food products.
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Oscar Mayer has attracted interest from several potential buyers who have submitted initial bids in recent weeks, said the sources, who requested anonymity as the discussions are confidential.
It will still take several weeks for a deal to be finalized if negotiations are successful, the sources added.
Kraft Heinz, which has a market value of nearly $43 billion, expects to obtain a valuation for Oscar Mayer equivalent to about 10 times its earnings before interest, taxes, depreciation and amortization of approximately $290 million, they said. the sources.
Kraft and JBS said they would not comment. Sigma did not immediately respond to requests for comment. The Wall Street Journal reported in May that Kraft Heinz was looking to sell to Oscar Mayer.
Business in the packaged food sector was solid last year, while large snack companies faced lower demand due to the impact of high price inflation and weight-loss drugs.
Family-owned candy giant Mars agreed to buy Cheez-It maker Kellanova in August for nearly $36 billion, in what was one of the biggest packaged food deals ever. JM Smucker acquired Twinkie maker Hostess Brands last year for $5.6 billion.
Reorganization at Kraft Heinz
Under new Chief Executive Carlos Abrams-Rivera, Kraft Heinz has reorganized its brands into three separate portfolios as part of a broader effort to boost the company’s share price, which has fallen about 4% this year. It underperformed the S&P 500 Packaged Foods & Meats index, which rose about 1% during the same period.
Oscar Mayer and other non-core brands such as cheese and coffee are currently grouped under the Balance division of Kraft Heinz.
Founded in 1883, Oscar Mayer is an iconic brand known for its hot dogs, deli meats and bacon. Kraft Heinz reduced the value of its Oscar Mayer and Kraft brands by $15.4 billion in 2019 after being hurt by lower consumer demand.
JBS, the world’s largest meatpacking company, is controlled by J&F, a holding company owned by Brazilian billionaire brothers Joesley and Wesley Batista. It owns poultry company Pilgrim’s Pride and distributes several other U.S. beef brands, including Swift, Certified Angus Beef, Blue Ribbon Beef and Cedar River Farms.
Sigma Alimentos is the food subsidiary of the Mexican conglomerate Alfa that produces and distributes meats, cheeses, yogurts and other refrigerated and frozen foods in the Americas, Mexico and Europe. It has distributed Oscar Mayer products in Mexico since 1993.
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