Hormel Foods Corp., purveyor of Spam and other meat offerings, is spreading itself into peanut butter with the buyout of the 80-year-old Skippy brand, its largest acquisition ever.

The $700 million deal will make Hormel the No. 2 player in the U.S. peanut butter market. And Skippy could serve as a springboard for Hormel -- still very much a domestic food company -- into coveted international markets, particularly China.

The deal unveiled Thursday will instantly boost Hormel's international sales by 30 percent. "Skippy is truly a global brand," Hormel CEO Jeffrey Ettinger said in an interview with the Star Tribune.

Austin-based Hormel will pay cash for Skippy, which has been owned since 2000 by Unilever, an Anglo-Dutch global food giant. Skippy had been run from Unilever's New Jersey offices, but Austin will now serve as ground zero for the peanut butter brand.

The deal, which requires regulatory approval, includes Skippy production sites in Little Rock, Ark., and in China's Shandong province. Unilever, whose products include Hellmann's mayonnaise and Ragu pasta sauce, has been shopping Skippy since October, seeking to pare its food holdings.

The price tag of $700 million is "well above" media reports that Skippy would fetch around $500 million, according to a research note Thursday by Edward Aaron, an RBC Capital Markets stock analyst.

But despite the potentially rich price, investors cheered the deal. Hormel's stock closed at $33.20, up $1.19 or 3.8 percent on a down day for the market generally.

"The market is giving [Hormel] the benefit of the doubt that they can take this business, integrate it and run with it," said Ken Perkins, an analyst a Morningstar Inc.

Hormel has a track record of making canny deals and boosting the profitability of its acquisition targets, analysts say. The biggest and best known was the $334 million buyout a decade ago of the Turkey Store Co., which was merged with Hormel's Jennie-O turkey business.

In recent years, Hormel snapped up Mexican food lines. It bought Unilever's Country Crock line of pasta and potato side dishes. And it bolstered a reputation for successful innovation around basic products, creating big sellers out of pepperoni snacks and ground turkey burgers.

But with Hormel's healthy balance sheet, Wall Street has been waiting for a more substantial deal -- the kind Skippy represents. While Hormel doesn't break out products by individual sales, Skippy's $370 million in annual sales will immediately make it one of the company's largest items, said Morningstar's Perkins.

Peanut butter is a $2 billion business, with 74 percent of American households as buyers, making it the second-most popular sandwich in the United States behind ham. Skippy is a solid No. 2, but its sales are well behind the market leader, Jif, made by J.M. Smucker Co.

For the year ended Dec. 2, Unilever had 16 percent of the U.S. peanut butter market, compared with 46 percent for J.M. Smucker, a share that also includes the Smucker brand, according to SymphonyIRI Group, which tracks sales at conventional food retail outlets.

Skippy was born during the same decade -- the 1930s -- as Hormel's famous Spam brand. Like Spam, it has a bit of Americana about it; Norman Rockwell once even illustrated Skippy's print advertisements.

But for all the food industry's globalization, Hormel's international scope is still somewhat stuck in the Norman Rockwell era.

"It's an $8.2 billion company [in revenue], with only about $500 million in international sales," said Pete Johnson, an equity analyst at Mairs & Power, a St. Paul money management firm with 2.23 million shares of Hormel. "Investors have been looking for Hormel to expand internationally."

Skippy is sold in more than 30 countries on five continents. Nearly $100 million -- more than 25 percent -- of its sales are from outside the United States.

The China market is "small but growing, and Skippy was the first peanut butter in China," Ettinger said. About $30 million to $40 million of Skippy's sales come from China.

Analysts say Skippy's distribution network in China should help bolster Hormel's efforts to sell Spam there, too -- an important part of the deal. "We describe China as the crown jewel of this transaction," said Farha Aslam, an analyst at Stephens Inc.

Overall, Skippy "is a very good fit for Hormel," she said. "It provides solid growth opportunities."

Star Tribune staff writer Paul Walsh contributed to this report. Mike Hughlett • 612-673-7003