Campbell Soup buys Rao's pasta sauce maker for $2.7 billion
CAMDEN - Campbell Soup Co. has announced a $2.7 billion deal to buy Sovos Brands, the producer of Rao's pasta sauces and other food products.
"This acquisition is a perfect fit," Campbell CEO Mark Clouse said in announcing the planned purchase.
Campbell, which makes Prego tomato sauces, would enter the "ultra-distinctive Italian sauce market" through Rao's, which has a record of strong sales growth, he noted.
Rao's also has expanded into new categories with products like frozen pizza and super-premium jarred soups.
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"Although frozen meals and pizza are new categories for us, the frozen route to market is not," said Clouse, noting Campbell's existing freezer products from its Pepperidge Farm business.
Campbell-Sovos deal also would deliver pasta, yogurt products
Campbell expects savings of $50 million over two years as the firms find "synergies" in areas like manufacturing, logistics and their supply chains.
He said Campbell's strengths in marketing and distribution would help build more sales for Sovos' products.
Sovos also markets the Michael Angelo line of frozen pasta meals and noosa yogurt products.
Clouse acknowledged the yogurt line "is not core to our strategy."
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But, he added, "The strength of the noosa business will allow us to be patient as we evaluate strategic alternatives."
Campbell expects growth with planned Sovos acquisition
Sovos' brands are expected to boost growth for Campbell's Meals & Beverages unit, where pasta sauce would become a $1 billion business.
Clouse said the acquisition, "paired with our faster-growing and differentiated Snacks division, makes Campbell one of the most dependable growth-oriented names in food.”
Sovos, based in Louisville, Colorado, on Monday reported first-half net sales of $470.4 million, a 15.5 percent gain from a year earlier.
Most of that growth was powered by the Rao's line, which saw sales rise by almost 34 percent over the same period.
First-half sales rose by 4.3 percent for noosa, but fell by 14.4 percent for Michael Angelo products.
Clouse said Campbell will apply lessons learned from previous acquisitions — the purchases of Snyder's-Lance snacks for $6.1 billion in 2018 and Pacific Soups for $700 million in 2017.
It will borrow to finance the cash transaction, which is expected to close by December.
The $23-per-share purchase awaits approval from regulators and Sovos shareholders.
Jim Walsh is a senior reporter with the Courier-Post, Burlington County Times and The Daily Journal. Email him at jwalsh@cpsj.com.
This article originally appeared on Cherry Hill Courier-Post: Campbell Soup agrees to buy Sovos Brands, producer of Rao's sauces
