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Campbell Soup Co. said Monday it has agreed to acquire Sovos Brands Inc., parent of pasta sauces and other foods sold under the brand names Rao’s, Michael Angelo’s and noosa, in a deal with an enterprise value of about $2.7 billion.
The deal “adds a high-growth, market-leading premium portfolio of brands to diversify and enhance Campbell’s Meals & Beverages division, providing a substantial runway for sustained profitable growth,” the company said in a statement.
Campbell
CPB,
will pay $23 per Sovos share
SOVO,
in cash, or a premium of about 28% over the stock’s closing price Friday at $18.02. The deal is expected to boost adjusted per-share earnings by the second year and to close by end-December.
Campbell Soup will fund the deal by issuing new debt.
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Sovos had annual sales of $837 million in 2022 and has enjoyed compounded annual organic net sales growth of 28% from fiscal 2019 to fiscal 2022.
“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 Campbell’s CEO Mark Clouse. “This acquisition fits perfectly with and accelerates our strategy of focusing on one geography, two divisions and select key categories that we know well.”
Sovos products include Rao’s pasta sauces, dry pasta, soups, frozen entrées, frozen pizza and yogurts under the noosa brand name. The Rao’s brand accounted for about 69% of its adjusted net sales in fiscal 2022 and grew 34.9% on an organic basis, meaning excluding forex effects.
Sovos’ stock soared 25% premarket after a trading halt for the news was lifted, while Campbell Soup’s stock fell 1,6%.
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