Campbell: Completes Acquisition of Sovos Brands

Camden / NJ. (csc) Campbell Soup Company announced it has completed the acquisition of Sovos Brands Inc. for USD 23 per share in an all-cash transaction, which represents a total enterprise value of approximately USD 2.7 billion. The acquisition was first announced in August 2023.

«This important milestone in Campbell’s history adds several market-leading and scaled premium brands to our company,» said President and CEO Mark Clouse. «It accelerates Campbell’s successful strategy and provides a substantial runway for sustained profitable growth. An enhanced Meals + Beverages division paired with our Snacks division creates an portfolio that makes us one of the most dependable and growth-oriented large capitalization value names in food.»

The Sovos Brands portfolio consists of a variety of premium products including pasta sauces, dry pasta, soups, frozen entrées, frozen pizza and yogurts under the brand names Rao’s, Michael Angelo’s and noosa. Sovos Brands recently reported USD 1.0 billion in net sales for the year ended Dec. 30, 2023 with an organic net sales increase of 25 percent1 year over year. Rao’s organic net sales increased 37 percent2, generating USD 775 million in annual revenue as it continued its march toward becoming a USD 1 billion brand.

New Distinctive Brands Business Unit within Meals + Beverages Combines Acquired Brands with Pacific Foods to Drive Accelerated Growth

To drive the continued growth trajectory of these premium brands, the company has formed a new business unit within the Meals + Beverages division called Distinctive Brands. Pacific Foods, a significant growth engine since it was acquired in December 2017, will be paired with 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, Senior Vice President and General Manager, and will have dedicated 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 Executive Vice President and President, Meals + Beverages.

«We’re excited to welcome the talented Sovos team to Campbell,» said Mick Beekhuizen. «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.»

The noosa brand is a well-run business supported by a dedicated team. As stated when the acquisition was announced, Campbell plans to evaluate strategic alternatives for the brand.

Significant Long-term Shareholder Value Creation Through Sales and Earnings Growth Contribution

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 USD 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.