Hormel to Buy Skippy Peanut Butter for $700 Million

Gives Hormel the No. 2 peanut butter brand in the U.S., the No. 1 in China.

By Rich Smith – Jan 3, 2013 at 12:05PM EST

On Thursday, Hormel Foods (HRL 0.74%) announced it has signed a definitive agreement to buy Unilever's (UL +0.33%) (UN +0.00%) Skippy peanut butter business, the No. 2 U.S. branded peanut butter and the No. 1 peanut butter brand in China.

In a statement, Hormel said it expects Skippy to record $370 million in annual sales, of which more than 25% come from outside the U.S. Hormel is paying $700 million for Skippy, or just under two times sales.

The company expects the acquisition to be "modestly accretive" in fiscal 2013, and to add $0.13 to $0.17 per share in fiscal 2014.

The Skippy peanut butter domestic line consists of 11 varieties of shelf-stable peanut butter products. According to Hormel, peanut butter is a $2 billion category and the second-most-popular sandwich behind ham in the United States.

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Rich Smith is a contributing Motley Fool defense and stock market analyst covering publicly traded and emerging companies in defense, space, aerospace, and other sectors. Prior to The Motley Fool, Rich practiced international corporate law for Clifford Chance in Russia, and for the Russian-Ukrainian Legal Group in Moscow, Kyiv, and Washington, D.C. He holds a bachelor’s degree in international relations from the College of William & Mary, a law degree from the University of Baltimore, and a language certification from the International Institute of Russian Language & Culture in Tver, Russian Federation. The Globe and Mail once featured him as “one of the best stock pickers since 2009.”

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Hormel to Buy Skippy Peanut Butter for $700 Million

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