Hormel sells company behind Muscle Milk to PepsiCo for $465M

The Minnesota company is ending its foray into the protein powder and drinks market.
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Minnesota's Hormel Foods is selling the company that makes Muscle Milk protein powders and shakes to PepsiCo in a deal with $465 million.

The deal was announced on Wednesday, with Austin-based Hormel confirming it's selling its CytoSport business to Pepsi in a deal expected to be completed in the next two months.

"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," said Jim Snee, CEO and president of Hormel Foods.

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

Hormel bought the California-based CytoSport in 2014 for $450 million as it sought to branch out into protein products that didn't involve meat.

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But, as the Star Tribune notes, it had struggled to make a success of the brand, noting disappointing performances in its CytoSport arm throughout last year.

The brand generated $300 million last year, but its operating margin was lower than the overall company's margins, Hormel announced on Thursday.

"We made strong progress with innovation and sales growth in the food, drug and mass channel," Snee said. "However, it became clear to us over time that PepsiCo is the right long-term owner of this business as they have deep expertise in this space."

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