Unilever is selling Skippy peanut butter to Hormel Foods, maker of Spam.(Photo: AP)
AUSTIN, Minn. -- Hormel Foods apparently has a hankering for a peanut butter and bacon sandwich.
The company primarily known for Spam and other cured, smoked and deli
meats said Thursday that it's buying Skippy, the country's No. 2 peanut
butter brand, for about $700 million from Unilever.
was introduced in 1932 and is a staple in American pantries, is intended
to increase Hormel's presence in the center of the supermarket where
shelf-stable foods are sold.
It also gives the Austin,
Minn.-based company a clearer path for growth overseas. Skippy is sold
in about 30 countries and is the leading peanut butter brand in China,
where Hormel is also looking for growth.
which also makes canned chili, sausages and pepperoni, currently gets
the vast majority of its sales in the U.S., with only about 4% of
revenue coming from abroad. Although swings in peanut butter prices have
made growth volatile, sales on average have increased about 4% annually
on a normalized basis, according to a spokesman for Unilever, which
currently owns the brand.
In the U.S., the Skippy line consists of
11 varieties of peanut butter, including Skippy Natural. Hormel noted
that Skippy is the leading brand in the faster-growing subcategory of
natural peanut butter. It estimated peanut butter as a $2 billion
Hormel expects annual Skippy sales of about $370
million, with almost $100 million of that from outside the U.S. The deal
includes Skippy manufacturing plants in Little Rock, Ark., and Weifang,
Hormel Foods said it expects the deal to modestly add to
its fiscal 2013 results and add 13 cents to 17 cents per share to fiscal
The transaction, which still needs regulatory approval, is expected to close early this year.
based in the Netherlands and the U.K., is one of the largest consumer
products companies in the world. It makes Vaseline, Dove soaps and
Lipton tea. The company had indicated last year it was considering
selling Skippy as part of a strategic review.