Kraft Heinz Co. KHC 0.59% is nearing a deal to sell its Planters snack business to Skippy peanut butter owner Hormel Foods Corp. HRL 4.61% , according to people familiar with the matter.
A deal, valuing the century-old brand at around $3 billion, could be announced as soon as next week, assuming the talks don’t fall apart, the people said.
Planters primarily sells nuts and snack mixes, with labels featuring the tophat-wearing and monocled Mr. Peanut mascot.
In addition to its eponymous chili and deli meats, Austin, Minn.-based Hormel sells other grocery items and protein-centric foods including Skippy and Justin’s nut butters. The company, which has a market value of about $25 billion, has been an active acquirer in recent years as it diversifies. A deal for Planters would be by far its largest to date.
Kraft Heinz, the product of a 2015 merger of the two well-known food companies, has been divesting brands after it struggled to keep up with shifting consumer tastes. The maker of Heinz ketchup and Oscar Mayer deli meats said in September the strategy will help the company simplify its business and focus on its most promising brands.
Planters was founded in 1906 by two Italian immigrants in Wilkes-Barre, Pa. Kraft Heinz in recent years had seen opportunity for the brand, given that it fit the trend toward low-carb, high-protein snacks. But efforts to expand it have been hit-and-miss and it was one of six brands whose lowered outlook led to a $290 million impairment loss last summer.
Kraft Heinz had net sales of just under $1 billion in its nuts and salted-snacks segment in 2019, the last full year the company has reported. It is set to report fourth-quarter results Feb. 11.
At the beginning of the pandemic, sales of pantry staples surged, giving a jolt to classics that had fallen out of favor with consumers. But as that demand wanes, deal making in the sector has picked up, with companies back to retooling their portfolios to meet changing tastes.
Kraft Heinz in September agreed to sell a chunk of its cheese business to France’s Groupe Lactalis SA for $3.2 billion. Like the cheese business, its nut business is in a highly commoditized sector that has struggled with competition from store brands.
McCormick & Co. agreed to buy hot-sauce maker Cholula in November, while Mondelez International Inc. agreed to buy the rest of paleo chocolate-bar maker Hu Master Holdings last month.
Mr. Peanut, introduced in 1916, appeared in Super Bowl ads in recent years. In lieu of a regular ad during this Sunday’s game, Mr. Peanut is “shelling out” the $5 million normally spent on the slot to reward acts of kindness, Kraft Heinz said Monday. That follows similar actions by other companies including Anheuser-Busch—whose parent company, like Kraft Heinz, is backed by investment firm 3G Capital—emphasizing charity amid the pandemic.
Write to Cara Lombardo at [email protected] and Annie Gasparro at [email protected]
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