Campbell Soup Co. has completed its acquisition of Colorado-based Sovos Brands for $23 per share in an all-cash transaction, which represents a total enterprise value of about $2.7 billion.
“This important milestone in Campbell’s history adds several market-leading and scaled premium brands to our company,” said Mark Clouse, Campbell’s president and CEO.
“It accelerates Campbell’s successful strategy and provides a substantial runway for sustained profitable growth. An enhanced Meals & Beverages division paired with our differentiated Snacks division creates an advantaged portfolio that makes Campbell one of the most dependable and growth-oriented large capitalization value names in food.”
Distinctive brands
The company has formed a new business unit within its Meals & Beverages division called Distinctive Brands. Pacific Foods, acquired in December 2017, will be paired with its other brands – Rao’s, Michael Angelo’s and noosa – to form the unit. The other three business units in the Meals & Beverages division are U.S. Retail, Canada and Foodservice.
Distinctive Brands will be led by Risa Cretella, SVP and general manager, and will have teams supported by Campbell’s scaled capabilities. Cretella most recently served as chief sales officer at Sovos Brands. She will report to Mick Beekhuizen, Campbell’s EVP and president of Meals & Beverages.
“We’re excited to welcome the talented Sovos team to Campbell,” Beekhuizen said.
“Risa is an accomplished leader with a strong record of growth and impact at Sovos, which makes her the right person to lead the Distinctive Brands business unit and build upon the trajectory and incredible momentum of these premium brands. Our Distinctive Brands business unit will fuel the transformation of our Meals & Beverages categories to accelerate growth.”
Shareholder value
The company expects a fast and effective integration given Campbell’s familiarity with the categories and its strong capabilities, processes and proven integration playbook.
The transaction is expected to be accretive to adjusted diluted earnings per share by the second year of ownership, excluding one-time integration expenses and costs to achieve synergies.
Campbell’s supply chain excellence and scale are expected to drive operating synergies, while improving scale efficiency of Campbell’s core operations. The company expects annualized cost synergies to reach approximately $50 million over the next two years.
Campbell will discuss the impact of the acquisition to its fiscal 2024 guidance when the company reports third-quarter earnings in June.
Campbell To Acquire Sovos Brands
New Jersey-based Campbell Soup Co. has announced its intention to acquire Colorado-based Sovos Brands Inc. for $23 per share in cash, representing a total enterprise value of about $2.7 billion.
Sovos Brands offers a variety of products including pasta sauces, dry pasta, soups, frozen entrées, frozen pizza and yogurts under the brand names Rao’s, Michael Angelo’s and noosa. The flagship Rao’s brand, which represented approximately 69 percent of Sovos Brands’ adjusted net sales in fiscal 2022, grew organic net sales by 34.9 percent compared to the prior year.
“We’re thrilled to add the most compelling growth story in the food industry and welcome the talented employees who have built a nearly $1 billion portfolio,” said Mark Clouse, president and CEO.
“This acquisition fits perfectly with and accelerates our strategy of focusing on one geography, two divisions and select key categories that we know well. Our focused strategy has enabled us to deliver strong results over the last five years, enhance our brands and capabilities and generate strong cash flow to lower debt.
“With all this progress, I am confident in our readiness to execute and integrate this important acquisition. The Sovos Brands portfolio strengthens and diversifies our Meals & Beverages division and, paired with our faster-growing and differentiated Snacks division, makes Campbell one of the most dependable, growth-oriented names in food.”
Todd Lachman, founder, president and CEO, said, “Today marks a momentous occasion for Sovos Brands as we announce our plans to join the Campbell’s family. We have built a one-of-a-kind, high-growth food company focused on taste-led products across a portfolio of premium brands, anchored by the Rao’s brand.
“Our success would not have been possible without the incredibly talented and passionate team at Sovos Brands, which has been instrumental in building one of the fastest growing food companies of scale in the industry today. This transaction is expected to create substantial value for our shareholders, resulting in a 92 percent increase from our 2021 IPO price.
“As one of the most trusted and respected food companies in North America, I’m confident in Campbell’s ability to continue bringing our products to more households and further building on our track record of growth and success for years to come.”
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