(By Balaseshan) Hormel Foods Corp. (NYSE: HRL), a manufacturer of consumer-branded food and meat products, said it has agreed to buy the Skippy peanut butter business from Unilever United States Inc., of Englewood Cliffs, New Jersey for about $700 million.
The Austin, Minnesota-based Hormel Foods said it expects the acquisition to be modestly accretive in fiscal 2013. Accretion in fiscal 2014 is expected to be between 13 and 17 cents per share.
The Skippy peanut butter domestic line consists of 11 varieties of shelf-stable peanut butter products. Peanut butter is a $2 billion category with a 74% household penetration and is the second most popular sandwich behind ham in the United States.
Internationally, Skippy peanut butter is the leading brand in China and is sold in more than 30 other countries on five continents. Total annual sales are expected to be about $370 million, with nearly $100 million of those sales outside the United States.
"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 non-meat protein product and it reinforces our balanced portfolio," said Jeffrey Ettinger, chairman of the board, president and chief executive officer at Hormel Foods.
Barclays is serving as exclusive financial advisor to Hormel Foods in connection with this transaction.
HRL closed Wednesday's regular session up 2.56% at $32.01. The stock has been trading between $27.28 and $32.02 for the past 52 weeks.