Pepsi Buys Muscle Milk in New CEO's First Move

(Bloomberg) -- PepsiCo Inc.’s new Chief Executive Officer Ramon Laguarta has made his first acquisition, purchasing the maker of sports and wellness products Muscle Milk from Hormel Foods Corp. for an undisclosed amount.

• Hormel Foods -- the maker of Spam and Skippy peanut butter -- announced the sale of its CytoSport unit in a statement Tuesday. The deal is expected to close in 30 to 60 days.

Key Insights

• While financial terms weren’t released, Hormel said more details about the deal will be released during the company’s earnings call on Feb. 21. Hormel CEO Jim Snee said PepsiCo is “in a strong position to grow this dynamic business.”
• CytoSport makes Muscle Milk and Evolve Protein products, which include protein powders, shakes and bars. Both are marketed as healthy, natural products to an active set of consumers -- a segment of the market that’s experienced growth.
• The purchase shows PepsiCo is continuing to diversify as Americans consume fewer soft drinks and more goods that are seen as healthy and lower in sugar. Under Laguarta’s predecessor, Indra Nooyi, PepsiCo bought SodaStream International Ltd. and baked fruit and vegetable snackmaker Bare Foods Co. Laguarta took the reins from Nooyi in October.

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