DOW JONES NEWSWIRES
Hormel Foods Corp. (HRL) and Mexico's Herdez del Fuerte SA de CV
said Friday they will expand on their current joint venture to
market Mexican foods in the U.S.
Hormel Chairman and Chief Executive Jeffrey M. Ettinger said the
deal will diversify the processed-meat maker's product portfolio
and allow it to expand in the Mexican food category.
The meat industry, like many others, has been reeling from
declining demand and oversupply, forcing producers, processors and
supermarkets to cut production and prices.
The companies have had a joint agreement since 1995 to market
the Mexican brands - including Chi-Chis, La Victoria and Dona Maria
- but said this 50-50 joint venture would "significantly expand"
their pact. The joint venture, to be called MegaMex foods, will
have initial revenue of about $200 million, the companies said.
"The collaboration should allow us to better serve both the
growing U.S. Hispanic population and the vast numbers of the
general population who love Mexican food," Ettinger said.
Herdez del Fuerte Chairman Juan Marco Gutierrez Wanless said the
deal will combine his company's products with the manufacturing and
distribution strength of Hormel.
The organization of MegaMex is expected to be completed around
Oct. 26, to coincide with the start of Hormel's new fiscal
year.
Hormel's shares closed Thursday at $34.35 and haven't traded
premarket.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com