Hormel Foods agreed to buy the Planters snack brand from Kraft Heinz for $3.35 billion in cash, expanding the Skippy peanut butter maker’s portfolio of pantry staples as the pandemic drives demand for packaged food.
The transaction provides a tax benefit of about $560 million, Hormel said in a statement Thursday.
The acquisition bolsters Hormel’s catalog of brands, which already includes household names such as Skippy, Spam and its eponymous deli meats.
While packaged foods have benefited during the pandemic as Americans have stocked their pantries, food-service revenue has taken a hit with restaurants and shopping centers closed or operating with limited capacity.
The purchase will be Hormel’s largest to date, according to data compiled by Bloomberg News.
Analysts have anticipated more deals by Hormel following several acquisitions in recent years, including buying Justin’s nut-butter brand in 2016.
Planters is America’s top-selling brand in the nuts, seeds and trail mixes category, according data from Euromonitor. Its grip is slipping, though, with its market share dropping to 16.2 percent last year, from 22.9 percent in 2015.
Planters had net sales of about $1 billion in 2020, Hormel said, noting that it plans to grow the brand.
Kraft Heinz CEO Miguel Patricio said on a conference call that the decision to sell was driven in part by competitive concerns.
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“Planters is one of the brands most affected by private label in our portfolio,” he said.
Kraft Heinz operates facilities in Iowa.