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Unilever to put Skippy peanut butter up for sale

Bloomberg/New York/ London 05 Oct 12 | 12:59 AM

Unilever is looking for a buyer for its Skippy peanut butter brand, which might fetch $300 million to $400 million, as it pares its food business to focus on faster-growing health and beauty products, said two people with knowledge of the matter.

The company has hired Lazard to help conduct the sale and started shopping the business this week, said the people, who asked not to be named because the plans are private. In the US peanut butter market, Skippy is a distant second to JM Smucker Co’s Jif. “As part of a recently completed strategic review, we decided to explore various options for the Skippy business in the US and Canada, including but not limited to a potential sale," Anita Larsen, a spokeswoman for Unilever, said.

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Unilever, based in Rotterdam and London, is pruning some of the brands and businesses that it doesn’t feel are core to its portfolio, one of the people said. In August, the company completed the sale of its PF Chang’s and Bertolli frozen meals businesses to ConAgra Foods for $267 million, and in 2010 sold food businesses in Italy, Brazil and the US.

Higher value?
“We have seen Unilever in the past being an excellent seller of assets and would not be surprised to see an even higher value for the proceeds" than $400 million, Marco Gulpers, an Amsterdam-based analyst at ING, said in a note to clients today.

Judi Mackey, a spokeswoman for Lazard, didn’t respond to an e-mail seeking comment.

Unilever’s food business, which includes brands such as Hellmann’s mayonnaise and Ragu pasta sauce, was responsible for 30 per cent of the company’s sales last year and 39 per cent of adjusted operating profit. About half of Unilever’s food revenue comes from Europe, where sales have been hurt by declining consumer confidence. Half of personal-care sales come from emerging markets, according to Berenberg Bank estimates. In 2011, food was Unilever’s only segment to post a decline in sales by volume.

“It makes sense," said Bryan Gildenberg, an analyst with London-based consulting firm Kantar Retail. “Unilever has been public about their desire to position themselves as more of a personal care company than a food company."

Shares gain
Unilever rose 0.1 per cent to 27.85 euros at 10:46 a.m. in Amsterdam trading, boosting its gain this year to 4.8 per cent. The food business doesn’t include Unilever’s ice cream and tea brands, which are housed in the refreshments unit.

Skippy had revenue of $300 million and 18.1 per cent of the US peanut butter market, not including sales at Wal-Mart Stores, for the year ended September 9, according to market researcher SymphonyIRI Group. Jif had 34 per cent of the market during that time, Chicago-based SymphonyIRI said.

Skippy was founded in 1933. The brand hired actress Annette Funicello to appear in television commercials in the 1970s. While the brand is iconic, competing with Smucker’s in that business is tough, Gildenberg said. Jif, a former Procter & Gamble (PG) brand, has been the top-selling peanut butter since 1981, and has maintained its lead by introducing varieties with lower sodium and reduced fat.

ConAgra and Kraft Foods Group also sell peanut butter in the US under the Peter Pan and Planters brands, respectively.

“There’s a chance that the brand is worth more to someone else," Gildenberg said. “There are more fun things to be than an underscaled competitor to Smucker’s."

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