Smithfield Buys Nathan's Famous for $450 Million, Ending Century-Old Independence
Smithfield Foods (SFD) announced today it will acquire Nathan's Famous (NATH) for $102 per share in cash, valuing the iconic Coney Island hot dog brand at approximately $450 million . The deal marks the end of Nathan's Famous as an independent company after 110 years.
Deal Terms
The acquisition price represents a 10% premium to Nathan's closing price prior to the announcement . At roughly 12.4x trailing twelve-month adjusted EBITDA—dropping to approximately 10x after expected synergies—the valuation reflects the strategic value Smithfield places on owning the brand outright .
Smithfield expects to realize approximately $9 million in annual cost synergies by the second year following close, primarily from eliminating redundant corporate expenses and optimizing the existing licensing arrangement . The deal is expected to close in the first half of 2026, subject to shareholder approval and regulatory clearance .
Strategic Rationale
The acquisition converts a licensing relationship into outright ownership. Smithfield has held exclusive rights to manufacture and sell Nathan's branded products since 2014 under a license agreement that runs through 2032, with extension options through 2036 . By acquiring the company, Smithfield secures perpetual rights to the Nathan's Famous brand while eliminating ongoing royalty payments.
For Smithfield, the deal deepens its presence in the premium hot dog segment. Nathan's Famous is the #1 selling branded beef hot dog in the United States, with distribution across foodservice, retail, and licensed restaurants .
The CFIUS Question
The transaction requires review by the Committee on Foreign Investment in the United States (CFIUS) because Smithfield's ultimate parent is WH Group, the Chinese meat processor that acquired Smithfield in 2013 for $4.7 billion . While Smithfield completed its IPO on NASDAQ in 2024, WH Group retains majority control.
The merger agreement includes specific provisions addressing CFIUS risk. If the deal fails to close due to CFIUS rejection or inability to obtain clearance, Smithfield must pay Nathan's a $7.41 million termination fee . The standard company termination fee for accepting a superior proposal is $10.58 million .
Given Nathan's Famous operates entirely in consumer food with no sensitive technology or infrastructure exposure, CFIUS clearance is widely expected. However, the current trade policy environment adds uncertainty to any deal involving Chinese ownership.
Financial Profile
Nathan's Famous has delivered steady growth in recent years, with revenue increasing from $130.8 million in fiscal 2023 to $148.2 million in fiscal 2025 . Net income grew from $19.6 million to $24.0 million over the same period .
| Metric | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Revenue ($M) | $130.8 | $138.6 | $148.2 |
| Net Income ($M) | $19.6 | $19.6 | $24.0 |
| EBITDA ($M) | $35.6* | $33.6* | $37.5* |
| EBITDA Margin | 27.2%* | 24.3%* | 25.3%* |
*Values retrieved from S&P Global
The company operates through three segments: the Branded Product Program (Smithfield licensing), Nathan's Famous Restaurants (franchises and company-owned locations), and the Licensing Royalty Program (brand licensing).
An American Icon
Nathan's Famous traces its origins to 1916, when Polish immigrant Nathan Handwerker opened a hot dog stand at the corner of Surf and Stillwell Avenues in Coney Island, Brooklyn. Legend holds that Handwerker started the business with $300 borrowed from two entertainers—Jimmy Durante and Eddie Cantor—who frequented the stand where Handwerker had worked as a delivery boy .
Handwerker's innovation was radical simplicity: he sold hot dogs for five cents, half the price of competitors, using his wife Ida's secret spice recipe. The business grew into a Coney Island institution and eventually a national brand synonymous with the American hot dog.
Today, Nathan's Famous is perhaps best known for hosting the annual Nathan's Hot Dog Eating Contest on July 4th, a competition that has become a fixture of American popular culture since its inception in 1972. The contest draws millions of television viewers and has produced legendary competitive eaters like Joey Chestnut.
Management and Governance
Nathan's CEO Eric Gatoff will receive a $3.25 million retention bonus in connection with the transaction, while CFO Robert Steinberg will receive $1.05 million . The company's board has unanimously approved the transaction and recommends shareholders vote in favor.
Holders of approximately 29.9% of Nathan's outstanding shares have entered voting agreements committing to support the deal, providing a substantial base of assured votes .
The merger agreement includes a 45-day "go-shop" period allowing Nathan's to solicit alternative proposals . The deal has an outside date of June 22, 2026, which can be extended to October 20, 2026 under certain circumstances including pending regulatory approvals .
What's Next
For Nathan's Famous shareholders, the immediate question is whether the 10% premium adequately reflects the company's value. The stock had traded at depressed levels relative to historical multiples, and the go-shop provision creates at least theoretical opportunity for a competing bid to emerge.
For the broader food industry, the deal illustrates ongoing consolidation in branded consumer products, where scale advantages in manufacturing, distribution, and marketing favor larger players. Smithfield's move to own Nathan's outright rather than continue licensing suggests management sees the brand as core to its strategy.
The hot dog eating contest will continue. Nathan's Famous as an independent company will not.
Jefferies LLC served as financial advisor to Nathan's Famous .