Campbell Soup to Feast on $2.7B Acquisition of Rao’s Maker Sovos Brands

Campbell Soup Co. has struck a deal to acquire fellow US food manufacturer Sovos Brands, the parent company of brands including Rao’s Homemade line of sauces, Michael Angelo’s and noosa yogurt, for a total enterprise value of approximately $2.7 billion, including debt.

NJ-based Campbell will pay $23 per share in cash, nearly a 28% premium to the stock’s close last Friday. The company plans to finance the acquisition through debt.

The flagship Rao’s brand, which represented approximately 69% of Sovos Brands adjusted net sales in fiscal 2022, grew organic net sales by 34.9% compared with the prior year.

During the past few years Sovos Brands, which went public in 2021, has extended Rao’s into frozen entrees, frozen pizza, pasta and soups.

“This acquisition fits perfectly with and accelerates our strategy of focusing on one geography, two divisions and select key categories that we know well,” said Campbell’s President and CEO Mark Clouse.

The acquisition, the largest for Campbell Soup since it paid $4.9 billion for snacks company Snyder’s-Lance in 2018, reflects a broader trend in the global food and beverage sector, which has seen a frenzy of M&A activity.

Last month, Unilever said it would buy frozen yogurt brand Yasso in North America while Mars Inc. agreed to buy Kevin’s Natural Foods.

With yearly cost reductions of around $50 million over the next two years, the acquisition is projected to help Campbell’s long-term financial growth goal. The termination amount, minus expenditures, would be $145 million.