Retailers, consumers and prices
Check out the deals by Ralcorp Holdings, Corn Products International and Heinz.
Ralcorp, which sells a variety of products, including Post-branded cereals, corn snack products, syrups and salad dressings, said it would buy private-label dry pasta maker American Italian Pasta Co for $1.2 billion. That deal is expected to close by the end of September.
“This transaction strengthens our position as a diversified provider of private label and branded food products,” Ralcorp co-Chief Executive and President Kevin Hunt said in a statement.
It also said it bought privately held North American Baking Ltd and JT Bakeries Inc for an undisclosed amount to expand its portfolio of gourmet crackers. Ralcorp expects the deals to add to earnings during the rest of the current fiscal year.
However, Ralcorp added that it expects to earn about $1.00 a share in the third quarter, below the $1.29 analysts were expecting. It cited heavier competition in the cereal category. The company does not plan to provide earnings outlook in the future except under “unique circumstances.”
H.J. Heinz makes no secret of the fact that acquisitions are part of its strategy, especially in areas like emerging markets and health and wellness.
Most recently, the company said earlier this month that it would buy Australian canned fruit and juice maker Golden Circle Ltd for about $220 million.
The company is still looking at “strategic acquisitions,” CFO Art Winkleblack told an investor conference. And the buffet of brands that Heinz can search from may never be larger.
“In the past few months, the pipeline of potential acquisitions has risen to unprecedented levels,” Winkleblack said.
“It would appear that the pipeline of potential acquisitions has risen because there are less private equity buyers in the market due to the current financial situation,” he said later through a spokesman.
The acquisitions Heinz cited were smaller ones that mostly added to existing categories. No reference was made to anything larger, like the comment Heinz CEO William Johnson made in August that Campbell Soup Co would be a “nice fit.” Will Heinz launch a bid for Campbell Soup in 2008?
Check out why Heinz didn’t suffer like Hormel did in the past quarter.
Food companies have found it tough going as commodity costs shoot up, but Hormel was particularly hard hit. The reason? It raises the turkeys that it eventually sells — meaning spiking corn feed costs hurt its results.
Markdowns? No good for Sears. The company, controlled by Eddie Lampert, posted a surprise loss, hurt by discounts and floundering sales at its Kmart and namesake stores. Immediate respite is not in sight, Sears said, as consumers juggle higher gasoline and food prices.