Austin-based Hormel Food Co. is one of the contenders to buy Unilever's Ragu, according to reports from Bloomberg and other news services.
Other contenders to buy the pasta sauce include J.M. Smucker Co.,Pinnacle Foods Inc., Hillshire Brands Co., Post Holdings Inc. and Japanese grocery supplier Mizkan Co., the story said, citing anonymous sources.
Hormel bought Skippy peanut butter from Unilever last year for $700 million, and now it's working on expanding the line by selling it in other forms than in a jar.
First round bids for Ragu, which may fetch as much as $2 billion, are due at the end of this week. The potential buyers have contacted their bankers.
The bidders will be betting that with a bigger marketing budget and innovation in new products, they can grow a brand that has stagnated, the Bloomberg story said.Under Chief Executive Officer Paul Polman, Unilever has focused on its health and beauty business while selling food brands.
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Founded in Rochester, N.Y., in 1937 and acquired by Unilever in 1987, Ragu accounts for about 40 percent of Unilever's $1.2 billion pasta-sauce sales, according to data tracker Euromonitor International and Liberum Capital. Sales have declined 18 percent since 2009, hurt by the growth of private-label sauces.
Ragu is the best-selling sauce in the U.S., with 27 percent of the market, according to Euromonitor. Campbell Soup Co.'s Prego brand is second with 18 percent.
On Monday, Hormel declared aquarterly dividend of 20 cents a share, to be paid May 15 to stockholders at the close of business on April 21.
It's the 343rd consecutive quarterly dividend paid by the company. Since becoming a public company in 1928, Hormel Foods has paid a regular quarterly dividend without interruption.
Hormel is a multinational manufacturer and marketer of consumer-branded food and meat products.
