Campbell Soup and Sovos Brands, Inc., the parent company of soup and sauce brand Rao’s, revealed Monday that Campbell will acquire the premium brand for $23 per share in cash, representing a total value of approximately $2.7 billion. Sovos Brands specializes in premium pasta sauces, dry pasta, soups, frozen entrées, frozen pizza, and yogurts marketed under the Rao’s, Michael Angelo’s, and Noosa brands.
According to Campbell, the strategic transaction adds a high-growth portfolio of brands to diversify Campbell’s meals & beverages division. The company added that this decision provides a path for sustained profitable growth.
“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 president and CEO Mark Clouse in a statement. “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.”
Campbell shared some key benefits from the acquisition, including:
• Campbell’s supply chain and scale are expected to drive Sovos Brands’ operating synergies while improving Campbell’s core operations.
• Growth opportunities for Rao’s and Michael Angelo’s through increased distribution, growing items per store, and household penetration to category peer levels.
• Campbell’s retail execution expertise is expected to enhance shelf productivity, geographic footprint, and sub-category penetration.
• Sovos Brands’ expertise in innovation, category expansion, and the marketing of high-growth brands are expected to enhance Campbell’s capabilities.
• Expansion opportunities for Campbell into the fast-growing, on-trend, premium frozen meals segment with Rao’s and Michael Angelo’s.
“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,” said Todd Lachman, founder, president, and CEO of Sovos Brands, in a statement. “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.”
The companies' boards have approved the acquisition; however, the transaction is subject to Sovos Brands’ stockholder approval and regulatory approvals. Closing is expected by the end of December 2023. Following the completion of the transaction, Sovos Brands’ results will be managed by Campbell.
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Image: Sovos Brands