Spam maker buying Skippy peanut butter

3 hrs.

Reuters

Hormel Foods Corp agreed to buy the iconic Skippy peanut butter brand from Unilever Plc for $700 million, adding the well-known kids lunch staple to a portfolio that includes Spam canned meat.?

The deal also helps Hormel, struggling with rising livestock feed costs, expand beyond meat products and gives it a bigger global presence, including in markets such as China where Skippy is the leading peanut butter brand.?

Consumer goods conglomerate Unilever said in October it was selling the Skippy line, as it shifted its focus to higher-growth food brands such as Knorr and Hellmann's, and fast-growing personal care products such as Dove, Lux and Rexona..?

Analysts, at the time, expected Skippy to fetch around $400 million.?

"In our view, (Hormel's) management has made a very smart move in diversifying away from its animal protein core at a time when margins are likely to correct downward. This deal plugs that gap," Janney Capital markets analyst Jonathan Feeney said in a note.?

Skippy, the No.2 U.S. peanut butter brand after J.M. Smucker Co's Jif, had annual sales of $300 million in 2011 and Hormel expects it to contribute $370 million this year.?

Skippy, launched in 1932, will also modestly add to Hormel's fiscal 2013 results and add between 13 and 17 cents per share to 2014 earnings, Hormel said.?

"(Skippy) allows us to grow our branded presence in the center of the store with a non-meat protein product and it reinforces our balanced portfolio," said Hormel Chief Executive Jeffrey Ettinger.?

The deal, which is Hormel's largest, will include Unilever's Skippy manufacturing facilities in Little Rock, Arkansas and Weifang, China, Unilever said.?

Barclays is serving as exclusive financial adviser to Hormel.?

Source: http://www.nbcnews.com/business/spam-maker-buying-skippy-peanut-butter-1B7812453

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