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Hormel Buys Maker of Farmer John Meats, Dodger Dogs

The $186-million deal for Clougherty will let the acquirer expand its presence in California.

December 31, 2004|Julie Tamaki | Times Staff Writer

Spam Dogs?

Hormel Foods Corp., which makes the iconic canned luncheon meat, said Thursday that it had purchased Vernon-based Clougherty Packing Co., producers of Dodger Dogs and Farmer John brand meats, for $186 million in cash.

The marriage of pork-product purveyors is expected to help Austin, Minn.-based Hormel meet production needs and strengthen the company's presence in California and the Southwest, particularly among the region's growing Latino population, Hormel executives said in a statement.

The Clougherty Packing management team and its roughly 1,800 employees -- including 300 workers on hog farms in Central California, Arizona and Wyoming -- are expected to stay in place.

"We're happy as heck," said Joe Clougherty, president of his family's namesake company. "We think it can only strengthen the brand and mean longevity for this company down the road."

Privately held Clougherty Packing doesn't disclose financial results, but Hormel executives said Clougherty's revenue was expected to be about $420 million in 2004. Hormel, which also owns the Dinty Moore and Jennie-O brands, reported sales of $4.8 billion in fiscal 2004.

Shares of Hormel closed up 52 cents to $30.65 on the New York Stock Exchange.

Analyst David C. Nelson at Credit Suisse First Boston said in a research note that the deal was positive for Hormel because "Southern California has a large and growing Hispanic population that over-indexes in pork consumption."

Nelson described Farmer John as the dominant slaughter operation on the West Coast, processing more than 1.6 million hogs a year. The Farmer John meatpacking plant in Vernon, south of downtown Los Angeles, is an area landmark, decorated with a huge mural of happy pigs enjoying life on the farm.

A banker involved in the deal portrayed the plant as one of the attractions for Hormel.

"In meatpacking today, you don't have the opportunity to locate a modern, highly efficient facility smack dab in the middle of such a large metropolitan area," said Lars Ekstrom, managing director of Goldsmith Agio Helms, the Century City-based investment banking firm that advised Clougherty Packing. "The location is obviously very desirable for Hormel."

Clougherty Packing traces its roots to the 1930s, when brothers Barney and Francis Clougherty started curing pork bellies and smoking hams in Los Angeles, leasing space in the Woodward-Bennett Packing plant.

The brothers purchased the plant in 1941 and gained exposure for the Farmer John brand in the following decade by sponsoring the TV show "Polka Parade."

In 1958, when the Brooklyn Dodgers moved to Los Angeles, Farmer John signed on as a team sponsor. That paved the way for announcer Vin Scully to pitch its products in television and radio ads, earning Clougherty Packing a soft spot in the hearts of many Southern Californians.

"Whenever the company has been in the family for 70 years, it's a very tough decision [to sell], but after much discussion we felt it was the correct thing to do," Joe Clougherty said. "We're looking forward to growing."

Quick to quell any concerns, Clougherty added that the Dodger Dog, the celebrated, extra-long hot dog named for the baseball team, was safe.

The sale to Hormel, he said, "will in no way change any recipe or the grilling and the whole nine yards up at Dodger Stadium."

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(BEGIN TEXT OF INFOBOX)

A packed history

1931: Los Angeles brothers Barney and Francis Clougherty start a business curing bellies and smoking hams.

1941: The brothers acquire the Woodward-Bennett meatpacking plant and expand their company to include processing sheep, hogs and calves. The company supplies meat rations to U.S. troops during World War II.

1943: The federal government charges Clougherty Packing Co. executives with selling more meat than their wartime quota permitted. They are acquitted at trial.

1953: The Cloughertys introduce the Farmer John brand. Through the 1950s, the company advertises on the weekly TV show "Polka Parade."

1957: The family hires a Hollywood set painter to create a huge mural on one factory wall to enhance its factory's image.

1958: After the Brooklyn Dodgers move to Los Angeles, Farmer John secures a sponsorship with the team and begins supplying the franchise's famous Dodger Dogs.

1960s to 1970s: The company develops a system of hog-buying stations in Nebraska, Kansas and Missouri.

1985: Meatpackers at the Clougherty plant strike for more than two months.

1994: Fire destroys part of the hot dog processing plant.

1998: The fresh pork sausage department is remodeled to enhance food safety.

2003: The company opens a 116,000-square-foot distribution facility.

Thursday: Hormel Foods announces it has bought Clougherty Packing for about $186 million.

Sources: Clougherty Packing, company reports, Times research

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