Hormel Buys Chicago Meat Supplier for $425M

The acquisition of Fontanini Italian Meats and Sausages is a move to expand Hormel's high-growth foodservice business.
Matthew HellerAugust 17, 2017

After focusing on food brand deals, Hormel Foods is beefing up its foodservice business by acquiring Fontanini Italian Meats and Sausages from Capitol Wholesale Meats for $425 million.

Fontanani mainly sells its sausages, pizza toppings and meatballs to restaurants, having started out as a meat shop in a predominantly Italian neighborhood of Chicago in 1960. It will become a unit of Hormel’s refrigerated foods division.

“This is a strategic acquisition for our high-growth foodservice division,” Hormel CEO Jim Snee said in a news release, noting that Hormel has a growing portfolio of customers in the lodging, restaurant, healthcare and college and university sectors.

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“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,” he added.

As the Minneapolis/St. Paul Business Journal reports, the deal “fits with Hormel’s M&A strategy lately: One big deal a year, always focused on meat and other proteins.”

Over the past few years, it has snapped up food brands including Skippy Peanut Butter for $700 million, Muscle Milk ($450 million), Applegate Farms ($775 million), and Justin’s, a maker of organic, nut-based snacks and spreads, for $286 million.

“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,” Capitol Meats CEO Gene Fontanini said.

Fontanini’s father founded the business, which in the 1970s moved into supplying meats for pizzerias in the Chicago area. According to the Minneapolis Star-Tribune, the Fontaninis “expanded the company in the 1980s with the purchase of a former Swift Eckrich plant in the Chicago stockyards and eventually launched national distribution.”

Jeff Baker, group vice president of foodservice at Hormel Foods, noted that Fontanini now operates a state-of-the-art production facility in McCook, Ill., that “has additional capacity to produce many Hormel Foods products.”