Posted at: 01/03/2013 7:15 PM
By: Katie Eldred
(ABC 6 NEWS) -- Austin based Hormel Foods announced they will be entering a new aisle of the grocery store Thursday. The company has purchased Skippy peanut butter for $700 million dollars.
The purchase of Skippy, the country's number two brand, is Hormel's biggest acquisition ever. Already the news of the deal has been good for business.
"Skippy, It's the kids choice we've tried other brands the kids seem to prefer that one," said Chris Hughes of Rochester.
Like Hughes family Hormel's favorite brand is now Skippy as well.
"It's our largest deal in terms of deal value," said Hormel CEO Jeffrey Ettinger.
The company famous for Spam has been working to spread beyond the meat department for several years now.
"We're really excited about having a brand so well-known and second of all to add a non-meat protein to our portfolio," said Ettinger.
The deal will instantly boost Hormel's international sales. Skippy peanut butter is sold in 30 other countries and is the top selling peanut butter in China.
"We're really excited about the international component, Spam is really our only global franchise so this gives us a stable American made item that should multiply our sales to other countries," said Ettinger.
For shareholders it's good news.
"Shares were already up today and they were up yesterday," said Ettinger.
While Ettinger is unsure if anyone will be making peanut butter and spam sandwiches and time soon.
"I've already been asked if they will be doing that but I’m not sure about that," said Ettinger.
Total annual sales are expected to be $370 million.
"This iconic product from the 1930's should sell well just like Spam a 1930's product sold well," said Ettinger.
Skippy fans were happy to see the local company make the buy.
"I think it's a good thing to see them expanding they've went through a lot over the years, so it's nice to see a local company stay busy and do some growth," said Hughes.
The transaction still needs approval in the U.S. and other jurisdictions. Peanut butter is a $2 billion dollar business, and it is the second most popular sandwich in the U.S. behind ham.