by Leigh Goessl

Created on: January 05, 2013   Last Updated: January 08, 2013

In what may be considered an unusual pairing, the company that makes Spam has bought up a major peanut butter brand. Media reports are confirming that Hormel Foods is paying approximately $700 million to buy Skippy peanut butter brand.

Currently, Skippy is owned by Unilever, who bought the company in 2000. Reportedly, several big-name food companies were interested in purchasing Skippy from Unilever, however it was Hormel who ending up making the multi-million dollar deal.

According to Bloomberg, Hormel Chairman and Chief Executive Officer Jeffrey M. Ettinger called the major purchase a "significant opportunity" in a company issued  statement. The company plans to expand the brand in the U.S.. and also accelerate its presence in foreign markets.

Hormel, which was launched as a company in 1891, is hoping with its non-meat based protein purchase to boost its presence in the Chinese market where Skippy is already a popular brand in the nation.

"The fast-growing international line will also strengthen our global presence and should be a useful complement to our sales strategy in China for the Spam family of products,” said Ettinger. The company is currently marketing its Spam product in Asian markets, customizing it to suit local tastes.

As a part of its strategy, Hormel plans to discover ways to "take the product out of the jar" and attach the brand to a variety of different products in  theU.S. market, noted Ettinger. The strategy for sales in China includes boosting the presence of the brand even more.

The Skippy brand has been on the market since the early 1930s and is one of the two top selling peanut butter brands; Jif peanut butter brand is the biggest seller in the U.S.

Kees Kruythoff, president of Unilever North America, said about the sale in a statement, “Skippy is an iconic brand with presence all around the world. As we continue to sharpen our portfolio to deliver sustainable growth for Unilever, we believe that the potential of the Skippy brand can now be more fully realized with Hormel Foods.”

It appears Unilever is going to put more emphasis on its personal-care product lines and less on the food products. The company previously had sold a frozen foods business and some analysts are predicting additional food division sales by Unilever could occur.

With the purchase, Hormel will receive Skippy manufacturing plants in Little Rock, Ark., and Weifang, China, reported the Wall Street Journal. The purchase will occur in two phases, the first in the U.S. will occur in April, and the second portion of the deal, the Chinese segment, will be completed sometime before October 2013.

Learn more about this author, Leigh Goessl.
Click here to send this author comments or questions.