CAMDEN, N.J. - Campbell Soup Company (NYSE:CPB) announced the completion of its acquisition of Sovos Brands, Inc. for $23 per share in an all-cash transaction valued at approximately $2.7 billion. The acquisition introduces premium brands including Rao's sauce, Michael Angelo's, and noosa into Campbell's Meals & Beverages portfolio.
Mark Clouse, President and CEO of Campbell, stated that the acquisition is a significant milestone for the company, accelerating its strategy and providing a substantial opportunity for sustained profitable growth. The addition of these brands is expected to contribute to long-term shareholder value creation through increased sales and earnings.
Sovos Brands reported $1.0 billion in net sales for the year ended December 30, 2023, with a 25% year-over-year organic net sales increase. Rao's, the leading brand in the portfolio, saw a 37% increase in organic net sales, reaching $775 million in annual revenue.
To drive further growth, Campbell has established a new Distinctive Brands business unit within its Meals & Beverages division. This unit will combine the newly acquired brands with Pacific Foods, acquired in December 2017, to accelerate growth. Risa Cretella, formerly Chief Sales Officer at Sovos Brands, will lead the new unit, reporting to Mick Beekhuizen, Campbell's Executive Vice President and President of Meals & Beverages.
Campbell expects the integration of Sovos Brands to be swift and efficient, leveraging the company's strong capabilities and integration playbook. The company anticipates annualized cost synergies of approximately $50 million over the next two years and expects the transaction to be accretive to adjusted diluted earnings per share by the second year of ownership, excluding integration expenses and costs to achieve synergies.
The impact of the acquisition on Campbell's fiscal 2024 guidance will be discussed in the company's third-quarter earnings report in June. Campbell's supply chain expertise is expected to drive operating synergies and improve the scale efficiency of its core operations.
This news article is based on a press release statement from Campbell Soup Company.
InvestingPro Insights
The recent acquisition of Sovos Brands by Campbell Soup Company (NYSE:CPB) has generated significant interest in the company's financial health and future prospects. According to InvestingPro data, Campbell Soup boasts a solid market capitalization of $12.82 billion, with a price-to-earnings (P/E) ratio of 16.72, reflecting investor confidence in its earnings capacity relative to its share price. Adjustments for the last twelve months as of Q2 2024 indicate a slightly more favorable P/E ratio of 14.46, suggesting improved profitability in relation to the company's market value during this period.
InvestingPro Tips reveal that despite some analysts revising their earnings expectations downwards for the upcoming period, Campbell Soup has a commendable track record of maintaining dividend payments for 54 consecutive years, which speaks to its financial stability and commitment to shareholder returns. Moreover, analysts predict that the company will remain profitable this year, a sentiment supported by its profitability over the last twelve months.
The company's revenue growth has been modest, with a 1.02% increase in the last twelve months as of Q2 2024, and its gross profit margin stands at a healthy 31.43%. These figures, coupled with the anticipated synergies from the Sovos Brands acquisition, may position Campbell Soup favorably for future growth.
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