Cal-Maine Foods to buy breakfast-foods business Echo Lake Foods

US egg major Cal-Maine Foods has agreed to acquire Echo Lake Foods, a breakfast foods manufacturer.

In a statement accompanying its third quarter results, Cal-Maine said it had “entered into a definitive agreement” to buy the Wisconsin-based company for approximately $258m.

Founded in 1941, Echo Lake Foods was acquired by the Meinerz family in 1981.

The company produces, packages and distributes a range of ready-to-eat egg products and breakfast items, such as waffles, pancakes, diced eggs and frozen cooked omelettes among others.

According to Cal-Maine, the breakfast-foods business reported approximately $240m in revenue in 2024, with a five-year compound annual growth rate of around 10%.

The egg group said the deal, which excludes expected tax assets, will be funded using existing cash reserves.

Commenting on the deal, Cal-Maine Foods president and CEO Sherman Miller said: “This transaction represents an exciting growth opportunity and important inflection point for Cal-Maine Foods, advancing our strategy to expand and diversify our product portfolio and customer mix. 

“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.

“We believe the potential acquisition of Echo Lake Foods meets our disciplined set of investment criteria, including relevant geographic markets, operating synergies, product mix, proximity to customers and expected financial returns”, Miller added.

The boards of directors of both the companies have approved the deal, and is expected to be completed by the end of fiscal 2025.

Following completion of the transaction, Echo Lake Foods will continue to run as a “stand-alone component of Cal-Maine Foods’ integrated operations with its four production facilities strategically located across the Midwest”, the statement added.

As part of the deal, Echo Lake CEO Kathy Brodhagen will become part of Cal-Maine’s senior leadership as president of Echo Lake Foods.

Cal-Maine said the acquisition would enable it “to enter the large, growing and highly stable value-added food portion of the egg category”.

The deal, it added would also provide an opportunity to grow “strategic customer relationships with retail, quick service restaurant and other foodservice customers”.

Cal-Maine also expects to leverage its existing sales and distribution infrastructure to support Echo Lake’s operations, and to realise “significant synergies” in egg procurement and operational efficiencies.

The purchase follows the group’s acquisition of “substantially” all of the assets of local peer ISE America and “certain affiliates” for around $110m last July.

The Echo Lake deal was announced as part of Cal-Maine’s third-quarter fiscal 2025 results.

For the thirteen weeks ended 1 March, the company reported net sales of $1.4bn, up roughly 100% on 2024, driven by higher average selling prices of shell eggs and increased volumes.

Operating income also rose 290% to $635m in the period, while gross profit for the group was up more than 200% to $716m.

In the 39 weeks to 1 March, Cal-Maine’s net sales were up 87% on the same period last year, at $3.2bn.

The group saw operating income rise 545.6% to $1.1bn, and gross profit increase 271.5% to $1.3bn.

In February, Mississippi-based Cal-Maine reached an agreement that will see its founding family relinquish the bulk of its voting power while keeping its economic interest.

The group said at the time it had signed a conversion agreement with Daughters’ LLC (DLNL), a vehicle that includes the four daughters of company founder Fred R. Adams Jr.

Adolphus Baker, Cal-Maine’s board chair and Adams’ son-in-law, is also a member of DLNL, which holds all 4.8 million Class A shares in the company and 1.1 million common shares.

The agreement could lead to the potential conversion of the family’s super-voting Class A shares into common stock, a company statement said.

The change would lead to a new governance structure at Cal-Maine and a potential diversification of the family’s financial holdings.