Like the $620 million purchase by Starbucks Corp. (Nasdaq: SBUX) of Teavana Holdings Inc., which won our Deal of the Year award for 2012, the $700 million 2013 acquisition by Hormel Foods Corp. (NYSE: HRL) of the popular Skippy peanut butter brand from Unilever plc (NYSE: UL) brings the buyer into new territory - in more ways than one.

"The acquisition of the Skippy peanut butter business represents a significant opportunity for Hormel Foods," Hormel CEO Jeffrey Ettinger said when the deal was announced. "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."

Peanut butter is a $2 billion category with a 74 percent household penetration and is the second most popular sandwich behind ham in the U.S. Introduced in 1932, the Skippy domestic line consists of 11 varieties of peanut butter products and holds the No. 2 share in the U.S., behind Jif from J. M. Smucker (NYSE: JMS). Skippy is the leading brand in the fast- growing subcategory of natural peanut butter.

"We're still very enthusiastic about our meat portfolio, but we have been making a very deliberate effort to become a bigger player in general packaged foods," Ettinger told the New York Times. Best known for making popular meat-based products, including the often-spoofed Spam lunchmeat, Hormel has recently leveraged acquisitions to expand into other foods. For example, in 2011 MegaMex Foods LLC, a Chino, Calif.-based company that is a joint venture between Hormel and Mexico City-based Herdez Del Fuerte, bought Fresherized Foods, the maker of Wholly Guacamole, the leading brand of prepared guacamole in the U.S. Skippy is Hormel's biggest purchase to date. The last big deal the Austin, Minn., company made was the $334 million acquisition of the Turkey Store Co. in 2001.

Hormel's strategy reflects a sea change in the eating habits of Americans. The healthy food trend fueled M&A in 2013, as we covered in depth in our September cover story, "Snack Time." Peanut butter's high protein content appeals to health-conscious consumers. Ettinger himself claims to be a fan of Skippy, preferring it on toasted English muffins for breakfast.

The Skippy deal also represents a significant geographical expansion for Hormel in particular and for middle-market dealmakers in general. Skippy is sold in 30-plus countries on five continents. Annual sales for the Skippy business are expected to be approximately $370 million, with nearly $100 million in international sales.

"Outside the U.S., peanut butter is a growth story," Ettinger said. "Skippy has a good franchise in Canada. It's growing in Mexico. And we really see opportunity in Asia." The transaction includes Skippy's factories in Little Rock, Ark., and in Weifang, China. In China, Skippy is the leading peanut butter brand.

Hormel's international group was highlighted at the company's recent annual shareholder meeting. Sales of Spam and other products outside the U.S. grew by 23 percent in fiscal 2013. "The foundation of our Spam family of products and well-developed fresh pork exports, plus the Skippy line of products and our focus on China, has us poised to continue our strong performance in 2014 and beyond," said group vice president James Snee.

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