Austin-based Hormel Foods is a likely bidder interested in acquiring Ragu, the best-selling pasta sauce brand in the U.S.
A report by Bloomberg identified the other companies possibly interested in bidding on Ragu. They include J.M. Smucker, Pinnacle Foods, Hillshire Brands, Post Holdings and and Mizkan Co. Bids are due at the end of the week, according to the report. The auction of the brand could fetch as much as $2 billion. Sources tell Bloomberg that all of the potential buyers have contacted banks to discuss their interest.
Ragu is owned by Unilever, the same company that sold Skippy to Hormel last year for $700 million. Unilever has recently focused on its health and beauty business while selling food brands. AdAge reports that Unilever, which is the world's second-biggest consumer-products maker, has hired Morgan Stanley to sell the unit.
Founded in 1937 and acquired by Unilever in 1987, Ragu accounts for about 40 percent of Unilever’s $1.2 billion pasta-sauce sales, but sales have declined 18 percent since 2009. The proliferation of private-label sauces have cut into Ragu's share, which is 27 percent of the market.
Earlier this month, the Motley Fool financial website noted that Hormel is diversifying and attracting new customers with new products in its portfolio. "Through this expansion, Hormel plans to strengthen its position in the lunch segment," the site added.