In a strategic move, US egg major Cal-Maine Foods has agreed to acquire Echo Lake Foods, a well-regarded breakfast foods manufacturer.
In its third quarter results announcement, Cal-Maine confirmed it had “entered into a definitive agreement” to purchase the Wisconsin-based company for approximately $258 million.
Founded in 1941, Echo Lake Foods has been under the stewardship of the Meinerz family since 1981.
This company specializes in producing, packaging, and distributing a variety of ready-to-eat egg products and breakfast items, including waffles, pancakes, diced eggs, and frozen cooked omelettes.
Cal-Maine reports that the breakfast foods business generated approximately $240 million in revenue for 2024, showcasing a five-year compound annual growth rate of around 10%.
The egg producer stated that the acquisition will be funded using existing cash reserves and will exclude expected tax assets.
Cal-Maine Foods’ president and CEO, Sherman Miller, emphasized: “This transaction represents an exciting growth opportunity and an important inflection point for Cal-Maine Foods, advancing our strategy to expand and diversify our product portfolio and customer mix.”
Miller added, “The combined product lines and capabilities of the two companies are highly complementary and, importantly, we share similar values of pursuing operating excellence and meeting the needs of our customers.”
The boards of directors from both companies have approved the acquisition, which is expected to close by the end of fiscal 2025.
Post-transaction, Echo Lake Foods will function as a “stand-alone component of Cal-Maine Foods’ integrated operations,” maintaining its four production facilities strategically located across the Midwest.
Additionally, as part of the agreement, Echo Lake CEO Kathy Brodhagen will join Cal-Maine’s senior leadership as president of Echo Lake Foods.
Cal-Maine indicated that this acquisition will allow it “to enter the large, growing, and highly stable value-added food portion of the egg category.”
Furthermore, this deal presents an opportunity to enhance “strategic customer relationships with retail, quick-service restaurants, and other foodservice customers.”
Cal-Maine also plans to leverage its existing sales and distribution infrastructure to boost Echo Lake’s operations, aiming to achieve “significant synergies” in egg procurement and operational efficiencies.
This purchase follows Cal-Maine’s acquisition of “substantially” all of the assets of local peer ISE America and “certain affiliates” for around $110 million last July.
The announcement of the Echo Lake deal coincided with Cal-Maine’s release of its third-quarter fiscal 2025 results.
For the thirteen weeks ending 1 March, the company reported net sales of $1.4 billion, reflecting a robust increase of roughly 50% over 2024, bolstered by higher average selling prices of shell eggs and increased volumes.
Operating income soared 290% to $635 million during this period, while gross profit surged by more than 200% to reach $716 million.
Over the 39 weeks leading up to 1 March, Cal-Maine’s net sales experienced an 87% increase compared to the previous year, totaling $3.2 billion.
Moreover, operating income rose significantly, climbing 545.6% to $1.1 billion, with gross profit increasing 271.5% to $1.3 billion.
In February, Mississippi-based Cal-Maine reached an agreement that delegates the bulk of its founding family’s voting power while maintaining their economic stake.
The group confirmed that it had signed a conversion agreement with Daughters’ LLC (DLNL), which represents the four daughters of founder Fred R. Adams Jr.
Adolphus Baker, Cal-Maine’s board chair and Adams’ son-in-law, also sits on DLNL’s board, which holds all 4.8 million Class A shares and 1.1 million common shares within the company.
This agreement could result in the conversion of the family’s super-voting Class A shares into common stock, as per the company’s statement.
The potential changes could lead to a new governance structure at Cal-Maine, along with a diversification of the family’s financial holdings.
