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Kraft Heinz to sell nuts business to Hormel for $3.35B

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Yahoo Finance’s Kristin Myers and Emily McCormick discuss Kraft Heinz earnings.

Video Transcript

KRISTIN MYERS: Let's talk Kraft Heinz now. They reported their fourth quarter earnings. We have Yahoo Finance's Emily McCormick for more details on that earnings report and what the company is going to be doing next. Hey, Emily.

EMILY MCCORMICK: Hi, Kristin, and taking a look at those fourth quarter results, those coming in much better than expected here for Kraft Heinz. That company really getting a boost from the fact that consumers are mostly eating at home. And so the retail side of the business is really surging, even as they have seen some demand declines on the restaurant side of the business.

Now we saw organic revenue beat expectations, growing 6% year over year. That was well above the 5% growth expected. It also more than reversed the 2.2% sales decline that the company posted in the same quarter of last year. We also saw adjusted earnings of $0.80 per share, better than the $0.73 per share expected.

But I will say, the big news out of this morning's report was actually the fact that the company is going to be selling its nut businesses to Hormel. This is going to be Hormel's largest deal to date. And it is valued at $3.35 billion. And it is an all-cash transaction.

Now, Hormel, in acquiring this part of the business, is going to be adding to its portfolio brands including the Planters Nut and Trail Mixes, Nut-rition, and Corn Nuts. So that will supplement the brands that Hormel already has in its portfolio, like Skippy Peanut Butter, as well as some others like the Justin Nut Butter brand that it actually purchased back in 2016.

Now this is really a bet here for Hormel on continued growth in packaged food, again especially because that retail consumer has been so strong here during the pandemic. I will highlight, though, that we are seeing shares of Hormel under some pressure, perhaps a little bit of concern about that more than $3 billion price tag, although we are seeing shares of Kraft Heinz up more than 5% in intraday trading. Kristin.

KRISTIN MYERS: All right, thanks so much, Yahoo Finance's Emily McCormick.