Unilever announced that it is selling its Skippy peanut butter business to The Hormel Foods Corporation for $700 million in cash. Skippy is the second largest peanut butter brand in the United States, behind Jif by J.M. Smucker. In October, Unilever announced that it was considering selling the Skippy business.
The company said it expected that the Skippy acquisition would add $0.13 to $0.17 to earnings per share in its 2014 fiscal year. Skippy reports sales of nearly $370 million annually, with $100 million of that figure earned from outside the United States. Jeffrey M. Ettinger, chief executive of Hormel, said, “Outside the U.S., peanut butter is a growth story. Skippy has a good franchise in Canada, it’s growing in Mexico, and we really see opportunity in Asia.”
The acquisition includes Skippy production plants in Little Rock, Arkansas, and in Weifang, China. Ettinger said, “It will be our third facility in China producing on a daily basis.” Mr.. Skippy is currently the leading peanut butter brand in China. Skippy sales in China account for between $30 million to $40 million of the $100 million in international sales.
Hormel is the producer of canned and cured meats and Spam. The company now has a growing stable of foods that are meatless, including Wholly Guacamole, a wide variety of Mexican foods, and several Country Crock side dishes. Other brands owned by the company include Chi-Chi’s, Dinty Moore, and El Torito. Nonfrozen grocery products account for 14% of the company’s annual revenue.
Many consumers are increasingly aware of the role that food plays in health. Peanut butter’s high protein content was one attraction in the acquisition. The company has also been targeting acquisitions that appeal to the growing ethnic diversity of American consumers. Mr. Ettinger said, “We’re still very enthusiastic about our meat portfolio, but we have been making a very deliberate effort to become a bigger player in general packaged foods.”
Skippy is the biggest acquisition by Hormel to date. The last big purchase by Hormel was its 2001 acquisition of the Turkey Store Company for $334 million. In August 2011, MegaMex Foods LLC, a joint venture between Hormel and Herdez Del Fuerte, spent an undisclosed amount to acquire Fresherized Foods, the maker of Wholly Guacamole and Wholly Salsa products. Hormel is based in Austin, Minnesota.