The Hormel Foods Corporation said on Thursday that it had agreed to buy the Skippy peanut butter business from Unilever for $700 million.
Unilever, the British-Dutch food and consumer products giant, announced in October that it was considering selling Skippy, the No. 2 peanut butter brand in the United States, behind J.M. Smucker’s Jif. Skippy has annual sales of roughly $370 million, with $100 million of that coming from outside the United States. It is the leading peanut butter brand in China.
It is the biggest acquisition by Hormel, known primarily for its fresh, cured, smoked and frozen meats. Nonfrozen grocery products account for 14 percent of its annual revenue, according to Thomson Reuters data. Its brands include Chi-Chi’s, Dinty Moore, El Torito and perhaps its best known, Spam.
The last big purchase by Hormel, based in Austin, Minn., was its $334 million acquisition of the Turkey Store Company in 2001, according to Standard & Poor’s Capital IQ data. The company said it expected that the Skippy acquisition would add 13 to 17 cents to earnings per share in its 2014 fiscal year.
The acquisition includes Unilever’s Skippy production plants in Little Rock, Ark., and in Weifang, China, Unilever said in a statement.
Jeffrey M. Ettinger, chief executive of Hormel, said in a statement: “The acquisition of the Skippy peanut butter business represents a significant opportunity for Hormel Foods. It allows us to grow our branded presence in the center of the store with a nonmeat protein product and it reinforces our balanced portfolio.”
Unilever has a huge portfolio of food and household goods brands, including Ben & Jerry’s ice cream, Dove soap and Lipton and PG Tips teas. It has shed brands in North America and Europe to focus on faster-growing emerging markets, which now account for more than half the conglomerate’s sales.
Barclays is advising Hormel Foods.
Lazard and the law firm of Cravath, Swaine & Moore advised Unilever.
DealBook: Hormel to Buy Skippy Peanut Butter
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DealBook: Hormel to Buy Skippy Peanut Butter
