American food company Smithfield Foods, Inc. announced they’ve entered a definitive merger agreement with Nathan’s Famous, Inc. Smithfield is to acquire all of Nathan’s Famous’ issued and outstanding shares for $102 per share in cash.
Reasons for Acquisition
- A Continuation of Their Previous Agreement: Since 2014, Smithfield has held an exclusive license from Nathan’s across North America to manufacture, distribute, market, and sell Nathan’s branded products through retail and foodservice channels. This merger marks Smithfield’s securement of the rights to Nathan’s in perpetuity.
- Synergies: Due to Smithfield and Nathan’s history, they are already aware of the synergies between them. Valuations project that this transaction represents approximately 12.4x Nathan’s Famous’s LTM adjusted EBITDA and a multiple of 10x post-synergies.
- Improved Operating Efficiency: Smithfield President and CEO claims they’ve “made significant investments to build and grow the Nathan’s Famous brand” since their 2014 license agreement. With Smithfield’s manufacturing scale and Nathan’s iconic brand, they plan to take the brand to new heights. Smithfield expects to achieve annual cost-synergies of $9 million within 2 years.
Conclusion
The merger between Smithfield Foods, Inc. and Nathan’s Famous, Inc. is expected to close within the first half of 2026. However, this date is subject to change based on conditions set forth in the merger agreement, including obtaining approval by the holders of a majority of the outstanding Nathan’s Famous stock.
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