Unilever has struck a deal to sell its Skippy peanut butter business to Hormel Foods for approximately $700m.
The transaction includes factories in Little Rock, Arkansas, and Weifang, China, and is expected to close early in fiscal 2013 (in the US) and by the end of fiscal 2013 (in China), subject to regulatory approvals.
Skippy, which has an annual turnover of c.$370m ($100m of which is generated outside the US), would get greater attention under a new owner, said Unilever, which recently sold its P.F. Chang’s and Bertolli frozen meals businesses to ConAgra after selling a string of non-core businesses in Italy, Brazil and the US.
North America president Kees Kruythoff added: “We believe that the potential of the Skippy brand can now be more fully realized with Hormel Foods.”
Skippy is the leading peanut butter brand in China
Skippy is the #2 brand in the peanut butter category in the US behind Jif and the leading brand in China, and is sold in more than 30 other countries on five continents.
Speaking on a conference call with analysts this morning, Hormel Foods chief executive Jeffrey M. Ettinger said Skippy was growing in the low single digits in the US and in the high single digits overseas, where its biggest markets are in China and Canada.
He said: "Peanut butter has a relatively low household penetration level [in China] but it is growing rapidly."
Asked about the recent food safety scares relating to peanut butter, he said that bosses at Hormel had visited both Skippy manufacturing facilities in the US and China and were "very comfortable with the processes they have in place".
Asked about commodity costs and volatile peanut prices, he said: "In the scheme of total Hormel we think this will have counterbalancing effects with other parts of the business."
Hormel CEO: Deal a useful complement to our sales strategy in China for SPAM
Minnesota-based Hormel Foods is best known for its iconic Spam brand, but it also owns a clutch of other well-known brands including Stagg Chili; Peloponnese Greek foods; CHI-CHI's, Doña María, Don Miguel, Embasa and Del Fuerte Mexican products; Jennie-O Turkey Store products, and scores of products under the Hormel brand.
The firm, which posted sales of $8.2bn in fiscal 2012, has five key segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, Specialty Foods, and All Other.