S&P Global Ratings and Moody's Ratings downgraded Hormel Foods Corporation after the packaged food company announced a $1.055 billion, debt-financed acquisition of value-added chicken processor Brakebush Brothers Inc. S&P cut Hormel's issuer credit and senior unsecured note ratings to 'BBB+' from 'A-', while Moody's lowered its senior unsecured debt rating to A3 from A2. The downgrades reflect expectations that the transaction will delay deleveraging as Hormel faces inflation, soft retail volumes and leverage from earlier transactions. S&P projects pro forma adjusted leverage will rise to 2.5x at closing from 1.8x before the deal, remaining above management's 1.5x-to-2.0x target range for more than two years. Moody's cited execution risks and a pro forma debt-to-EBITDA ratio of 2.8x, while noting that high dividends and subdued operating earnings will restrict near-term free cash flow. Both agencies recognized the strategic rationale: Brakebush primarily serves foodservice customers under a contracted cost-plus fixed-price model, giving Hormel protected, non-commodity chicken exposure and greater scale in its highest-performing operating segment. S&P expects the deal to add significant EBITDA and revenue scale, supporting a return of consolidated EBITDA above $1.4 billion, while management targets at least $20 million in annualized cost synergies by fiscal 2028. Moody's said Hormel's liquidity, including $840 million in cash as of July 2026 and an undrawn $750 million revolving credit facility, should provide a buffer for the transaction and upcoming debt maturities. Both agencies assigned stable outlooks, expecting cash flow to be directed toward debt reduction rather than additional acquisitions or aggressive capital returns. They warned that continued margin compression, integration problems or failure to reduce leverage toward 2.0x could lead to further downgrades.