Hormel expects the Brakebush acquisition to boost profits over time
S&P Global Ratings and Moody’s Ratings have downgraded Hormel Foods Corporation's credit ratings following the company's $1.055 billion acquisition of value-added chicken processor Brakebush Brothers Inc. The debt-financed deal indicates management's temporary departure from conservative balance sheet targets, amidst inflationary pressures, reduced retail volumes, and elevated leverage from prior transactions.
S&P lowered Hormel's ratings to 'BBB+' from 'A-', citing a delayed deleveraging trajectory, while Moody's lowered its rating to A3 from A2, citing execution risks and a pro forma debt-to-EBITDA leverage metric of 2.8x. The agencies recognized the industrial logic behind the deal, which adds substantial EBITDA and top-line scale to Hormel, potentially helping it return consolidated EBITDA above $1.4 billion by 2028.
Both agencies also assigned a stable outlook to Hormel's new ratings, warning that persistent margin compression, integration hurdles, or failure to reduce leverage could lead to further credit downgrades.
Written by urgent.news from Investing.com's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
This story
This is one outlet's version. Read the fullest account.
