PepsiCo Buys Muscle Milk: What Does It Mean For The Company?

Under the direction of CEO Ramon Laguarta, PepsiCo Inc. (PEP) has purchased Muscle Milk from Hormel Foods Corp (HRL). The sports and wellness product producer put its CytoSport business up for sale on Tuesday.

This is the first acquisition for Laguarta, which is expected to close within 30 to 60 days. Financial details were not released by the companies.

For PepsiCo, the deal makes sense as Jim Snee, chairman of the board, president and chief executive officer at Hormel Foods, said, “PepsiCo has deep expertise and experience in the sports nutrition category and has been a long-standing distribution partner for CytoSport and the Muscle Milk brand, which puts them in a strong position to grow this dynamic business.”

“We look forward to working with PepsiCo to ensure a smooth transition for our team members, suppliers, customers and consumers,” he added.

PepsiCo continues to expand its portfolio of products as Americans turn away from soft drinks, opting for healthy and low-sugar products, Bloomberg reported.

Hormel Foods acquired CytoSport in 2014 for approximately $450 million. The Muscle Milk brand includes ready-to-drink beverages, protein-based powders, sports nutrition bars, and energy chews, and has a long-standing partnership with Golden State Warriors' point guard Stephen Curry.

The Evolve brand was introduced in 2017. Its product lineup includes protein shakes, powders, and bars. Muscle Milk and the Evolve Protein products are produced and sold under the CytoSport umbrella.

Hormel said more information about the deal would be released during its earnings call on Thursday.

Shares of PepsiCo stock were down 0.11 percent as of 3:36 p.m. EST on Wednesday while shares of Hormel Foods stock was down 0.45 percent at the same time.