"Ask me about my weiner!" - Smithfield, probably... 

Smithfield Foods has officially backed up the glizzy truck as the Chinese-owned pork empire out of Virginia announced it’s acquiring Nathan’s Famous… in a $450M deal. Why? Because other than blessing us with American Icon, Joey Chestnut… Nathan’s Famous basically owns the Fourth of July. So what better way to imprint the Red Dragon on American soil than to buy the one company that savors the U.S. of A’s two favorite past times: Hot Dogs and Beer. 

(Source: Giphy) 

In short, Smithfield is paying $102 per share, which is about a 10% premium on Nathan’s last close. Nathan’s stock immediately popped almost 9% because the market loves two things: getting cashed out and not having to pretend it understands food companies. Meanwhile Smithfield dipped a bit because acquirers always get punished for splurging the next dividend reservoir. 

(Source: New York Post) 

However, what makes this deal interesting (and what most people don’t realize) is that Smithfield already makes Nathan’s hot dogs. For context, They’ve had an exclusive licensing deal since 2014 to manufacture and sell Nathan’s products across the U.S. + Canada (and Sam’s Club in Mexico). That license wasn’t even set to expire until 2032. Translation: Smithfield looked at a contract that said “you can print money for 18 more years” and now they want the whole printer. 

And it makes sense. Right now the entire food industry is in its “roll-up era” where nobody wants to compete, innovate, or take risks. So the move is to simply buy brands people already emotionally support, then squeeze the margins. Smithfield’s CEO basically said the quiet part out loud: Nathan’s is a “meaningful step” in owning the top packaged meat brands and “unlocking growth opportunities.” What’s more is that Smithfield is projecting $9 million in annual savings from this deal. Which is like… two weeks of ad spend for Netflix. But for meat companies, it’s a new yacht and a second divorce (read: Godsend). 

(Source: Giphy)

“BuT WHaT AbOUt ThE hOt dOG CoNTeSt?” 

Good question. The Super Bowl of gluttony, and America’s most sacred cultural moment outside of arguing about gas prices and posting bald eagle memes… is staying put. They even hit the New York Post with the wholesome line about “continuing this great American tradition.” Thanks Kings. We appreciate it. 

As for Joey Chestnut, himself, it’s about high time he renegotiate his deal immediately. Because he put Nathan’s on his back… and now, it’s getting a $450 million payday. Bigly. Until next time, friends… 

At the time of publishing, Stocks.News does not hold positions in companies mentioned in the article.