L.A.'s famed Dodger Dog will join the product line that includes Spam and Jennie-O Turkey now that Clougherty Packing Co., the company behind the Farmer John brand, has been acquired by Hormel Foods Corp. for $186 million.
Farmer John was founded in 1931 by two brothers, Barney and Francis Clougherty, who purchased the Woodward-Bennett meat-processing plant in Vernon 10 years later.
The company started out by curing pork bellies and smoking hams, then supplied meat rations to U.S. troops during World War II. It secured a place for itself in L.A. history in 1958 when it linked up with the newly arrived L.A. Dodgers. Farmer John became the official hot dog sponsor of the team and the stadium, and Dodger Dogs were born.
"[Selling] was a very tough decision for the family, there's no doubt about that," said Joe Clougherty, son of Francis Clougherty and president of the company. "We're probably the last people here in Vernon as far as meat-packing goes."
While other meat-packers have shuttered their plants and moved operations to the Midwest, Hormel plans on keeping the Vernon plant open. Clougherty said the sale would have no effect on the plant's day-to-day operations.
"The family will still be in charge. Obviously there will be some direction from Austin (Minn.), but we will still have management the management position." Clougherty said he does not anticipate any layoffs as a result of the deal.
Clougherty Packing has 1,200 employees in the Woodward-Bennett plant, 700 of which are butchers.
Farmer John has a more than 20 percent market share of the sausage and bacon market in the L.A. area, placing it at a strong No. 1 in most of its products. Hormel's market share in sausage, bacon, sliced ham and other pork products was "far below that," according to investment banker Lars Ekstrom of Goldsmith Agio Helms, who represented Clougherty.
The deal will allow Farmer John to extend its nationwide reach beyond the Southern California, Arizona and Nevada area it now covers, Ekstrom said, using Hormel's marketing and distribution channels.
A bigger question for Farmer John devotees is whether the sausages and hot dogs will remain the same once the maker of Spam gets a hold of the brand.
Clougherty insisted that everything from harvesting animals to packaging meats will continue as it was at the Vernon plant. As to whether the deal will allow Hormel to use the Farmer John name on products produced in plants in other parts of the country, "That has not been discussed," said company spokesman Steve Duchesne.
Clougherty Packing sells more than 400 million pounds of pork per year and projected 2004 sales of $420 million. The Farmer John brand will join Hormel's Herdez, Dona Maria and Bufalo pork product lines.
Hormel had been eyeing Clougherty because it was the only facility west of Oklahoma, according to Ekstrom, and provided export opportunities to Asia. Another reason, he added, was that Clougherty had thriving relationships with food service providers such as Jack in the Box, Burger King, Subway and Sonic in Southern California.
Shares of Hormel rose 32 cents, or 1.1 percent, to $30.45 after the purchase was announced Thursday. Hormel posted net income of $185.8 million on total sales of $4.2 billion in 2003.
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