Swander Pace exits Applegate Farms in $775m deal

Consumer-focused private equity firm sells minority interest in organic meat company.

Swander Pace Capital, a San Francisco private equity firm, has agreed to sell its minority stake in organic meat purveyor Applegate Farms to Hormel Foods for $775 million, according to a statement.

While financial transaction terms between the seller and Austin, Minnesota-based acquirer were not disclosed, Applegate founder Stephen McDonnell joined Swander Pace as one of the company’s selling shareholders in the deal. McDonnell established the New Jersey-based company 28 years ago.

Officials from Swander Pace declined to comment on the exit, which is expected to close in roughly 60 days.

Rob DesMarais, a managing director at Swander Pace, said in a statement that the transaction represents the successful execution of the firm’s consumer products investment strategy.

Swander Pace, a firm overseeing $1.3 billion spread between five funds, has carved a unique niche in private equity as an experienced consumer products investor. Its past portfolio companies have included Fleischmann’s Vinegar, Totes Isotoner, Nonni’s and current holdings are comprised of Kicking Horse Coffee Company, Oregon Ice Cream and Clarion Brands, among others. It is presently investing out of its $350 million SPC Partners V fund.

Applegate, a 100-employee company, is a seller of more than 140 products in stores nationwide, including its “Uncured Sunday Bacon” offering along with a wide range of other antibiotic-free meat items such as deli-type meats, hot dogs, sausages, frozen breaded chicken and pre-packed lunch kits. As part of the deal, company chief executive Kerry Collins will remain CEO while McDonnell will serve as an advisor.

Applegate’s 2015 revenues are expected to total roughly $340 million.

Credit Suisse is serving as financial advisor to Hormel.

This story was written by Kelly Holman.