JBS, Sigma compete for Kraft Heinz’s Oscar Mayer business in US$3B sale

USA – Brazil’s JBS and Mexico’s Sigma Alimentos are reportedly among the companies vying to acquire Oscar Mayer from Kraft Heinz, according to sources cited by Reuters.

Oscar Mayer, headquartered in Chicago, Illinois, is a major brand in the processed meats sector, known for its production of hot dogs, bacon, bologna, ham, and the popular Lunchables line. 

A subsidiary of Kraft Heinz, Oscar Mayer has long been a staple in the U.S. food market, but Kraft Heinz first hinted in May that it was exploring options to sell the brand.

The anticipated sale of Oscar Mayer, which could bring in around US$3 billion, aligns with Kraft Heinz’s strategy to reshape its product portfolio. 

The food giant reportedly aims to pivot towards healthier food items, as demand for certain processed foods has waned amid the rise of weight-loss medications. 

Analysts suggest that such shifts in consumer behavior, particularly in the U.S., have pressured Kraft Heinz to consider realignment within its offerings.

Several interested parties have recently submitted preliminary bids for Oscar Mayer, with insiders indicating that, if negotiations proceed smoothly, a finalized deal may be reached within weeks. 

According to sources, Kraft Heinz is aiming for a valuation based on a multiple of Oscar Mayer’s earnings before interest, taxes, depreciation, and amortization (EBITDA), estimated at US$290 million. 

This target would set Oscar Mayer’s sale price at roughly 10 times its annual EBITDA.

The consumer-packaged goods sector has seen a robust period of deal-making over the past year, as inflation and health trends have impacted consumer spending on processed foods and snacks. 

In one of the largest food industry acquisitions, Mars purchased Kellanova for close to US$36 billion in August. 

Additionally, JM Smucker divested its Voortman cookie brand to Second Nature Brands for approximately US$305 million earlier this week. 

Last year, JM Smucker made headlines with its US$5.6 billion acquisition of Hostess Brands, the producer of Twinkies.

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