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Spam maker Hormel to buy Skippy peanut butter from Unilever

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Lunch meat purveyor Hormel Foods is making a run at the supermarket’s middle aisles, buying the Skippy peanut butter brand for about $700 million.

The Austin, Minn., company, also known for its Spam canned ham, is acquiring Skippy from Unilever’s U.S. operation, which also owns brands such as Vaseline and I Can’t Believe It’s Not Butter!

Hormel, whose main strength is its domestic sales of Jennie-O, Farmer John and other lunch meats, is trying to expand its portfolio of products and boost its presence overseas.

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Skippy, said Hormel Chief Executive Jeffrey M. Ettinger in a conference call with analysts, “will become one of our biggest brands.”

Introduced in 1932, Skippy is the second-largest peanut butter brand in the U.S., trailing only Jif, which is owned by the J.M. Smucker Co. The peanut butter industry is worth $2 billion, according to Hormel.

Nearly three quarters of U.S. households eat peanut butter, the key component in the second-most popular American sandwich, Hormel says.

Skippy was introduced in 1932 and sells 11 varieties of peanut butter. It’s currently the top peanut butter brand in China – a “focus market” for Hormel for more than a decade, Ettinger said – and is also sold in more than 30 other countries.

Hormel said it expects Skippy to bring in annual sales of $370 million, nearly $100 million of that from abroad.

Ettinger emphasized Skippy’s leading role in the market for natural peanut butter, which he said makes up a quarter of domestic peanut butter sales. He also noted Hormel’s efforts to break into side dishes and Mexican food.

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The deal gives Hormel control of Skippy manufacturing facilities in Little Rock, Ark., and Weifang, China. After regulatory approval, the transaction is expected to close early this year.

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