Campbell Soup Company completes $2.7bn acquisition of Sovos Brands

Campbell Soup Company (NYSE: CPB) has announced the completion of its acquisition of Sovos Brands, Inc. for $23 per share, an all-cash transaction valued at approximately $2.7 billion. This acquisition marks a significant milestone in Campbell’s history, adding several market-leading and scaled premium brands to its portfolio and promising to accelerate the company’s strategy for sustained profitable growth.

The deal brings Sovos Brands’ array of premium products, including pasta sauces, dry pasta, soups, frozen entrées, frozen pizza, and yogurts under renowned brand names like Rao’s, Michael Angelo’s, and noosa, into Campbell’s extensive product range. Sovos Brands reported an impressive $1.0 billion in net sales for the year ended December 30, 2023, with an organic net sales increase of 25% year over year. Notably, Rao’s organic net sales surged by 37%, amassing $775 million in annual revenue, edging closer to becoming a $1 billion brand.

To leverage the growth potential of these acquired brands, Campbell has established a new business unit within its Meals & Beverages division named Distinctive Brands, which combines the newly acquired brands with Pacific Foods. The Distinctive Brands unit aims to drive accelerated growth and will be led by Risa Cretella, previously Chief Sales Officer at Sovos Brands. Campbell anticipates this reorganization will transform its Meals & Beverages categories and fuel growth across the board.

Mark Clouse, President and CEO of Campbell, highlighted the acquisition’s role in enhancing Campbell’s Meals & Beverages division alongside its Snacks division, positioning Campbell as a leading large capitalization value name in food. Mick Beekhuizen, Campbell’s Executive Vice President and President, Meals & Beverages, expressed enthusiasm about the integration of Sovos Brands and the leadership of Risa Cretella in spearheading the new business unit.

Campbell expects the acquisition to be accretive to adjusted diluted earnings per share by the second year of ownership, with anticipated annualized cost synergies of approximately $50 million over two years. This integration underscores Campbell’s commitment to driving shareholder value through sales and earnings growth.

The company also plans to explore strategic alternatives for the noosa brand, with a focus on ensuring the continued success and growth of the other premium brands within the Distinctive Brands business unit.

Campbell Soup Company’s acquisition of Sovos Brands for $2.7 billion represents a strategic move to expand its premium brand portfolio and drive growth. With significant expectations for enhanced operational efficiency and profitability, this acquisition is poised to contribute to Campbell’s long-term shareholder value.