Hormel Foods and Herdez Del Fuerte SA de CV announced a definitive agreement to create MegaMex Foods, a 50/50 joint venture to market Mexican foods in the United States.
The venture will significantly expand the existing agreement between the two companies and produces a portfolio with initial revenue of about $200 million. The portfolio includes brands and products, such as Chi-Chi’s, Herdez, La Victoria, Embasa, and Doña María, among others.
In order to provide focus to the business, MegaMex Foods will be a free-standing entity with an independent management team based in Chino CA. MegaMex Foods will optimize efficiencies by leveraging core competencies of the parent companies, such as manufacturing, research, and development and the supply chain.
The organization of MegaMex Foods is expected to be completed around October 26, 2009, which coincides with the start of fiscal year 2010 for Hormel Foods. Formation of the expanded joint venture is conditioned upon the parties reaching agreement on the joint venture structure and ancillary agreements relating to product manufacturing, management services, and product and trademark licenses, and upon other customary conditions.
Atlas Strategic Advisors LLC, a New York investment banking firm, acted as exclusive advisor to Hormel Foods and Herdez Del Fuerte in the transaction.
