Campbell’s US$700m Cash Deal for Pacific Foods

07 Jul 2017 --- Campbell Soup Company has entered into an agreement to acquire Pacific Foods of Oregon for US$700 million. Once again demonstrating its focus on diversification, this acquisition is the latest in a long line of Campbell deals over the last five years focused on reshaping the company’s portfolio for continued growth.

Like many other food and ingredients companies, Campbell is making a point of diversifying its portfolio in response to increased consumer interest in health, well-being and nutrition.

Back in 2012 Campbell acquired Bolthouse Farms, followed by organic baby-food company Plum and biscuit company Kelsen in 2013 and fresh salsa and hummus maker Garden Fresh Gourmet in 2015.

Campbell plans to fund the acquisition through a combination of short- and long-term debt, and the acquisition is not subject to any financing condition.

The closing of the transaction is subject to regulatory approvals and customary closing conditions and Campbell expects the acquisition to be neutral to earnings in the first 12 months following closing, excluding certain purchase accounting adjustments, and transaction and integration costs.

Pacific Foods
Founded in 1987, Pacific Foods is a leading producer of organic broth and soup, as well as producing shelf-stable plant-based beverages and other meals and sides. Pacific Foods has a sustained track record of growth, and generated approximately US$218 million in trailing twelve month net sales as of May 31, 2017.

Pacific Foods describes itself as “a natural foods industry pioneer” with strong health, well-being and organic credentials, particularly with younger consumers.

Its products and approach are very closely aligned with Campbell’s real food philosophy. Pacific Foods will help accelerate Campbell’s efforts to deliver real food and beverages that meet consumers’ changing tastes and preferences.

According to Campbell, the acquisition will also further its efforts to drive innovation in health and well-being to reinvent the center store, while giving the company more access to natural and organic customers and channels.

The Rise of Organics
Organic food is a more than US$11 billion category in the US, which grew at a compound annual growth rate of 15.3 percent over the past four years.

Denise Morrison, Campbell’s President and Chief Executive Officer, said, “This acquisition is consistent with our purpose, ‘Real food that matters for life’s moments.’ Pacific is an authentic brand with a loyal consumer following. The acquisition allows us to expand into faster-growing spaces such as organic and functional food.”

“Moreover, Pacific Foods is an excellent fit with Campbell — strategically, culturally and philosophically. It advances our strategic imperatives around real food, transparency, sustainability and health and well-being.”

“Culturally, Campbell and Pacific Foods share similar values and a commitment to a purpose-driven approach. Philosophically, both companies believe in making food that we are proud to serve at our own tables using simple, recognizable ingredients.”

Campbell plans to bring its expertise and scale to Pacific Foods and invest in the business to drive full force growth. Campbell also expects to expand distribution; boost marketing support for brand building to engage consumers and shoppers; and invest in R&D and the supply chain to deliver operations and customer service excellence.

Pacific Foods will become part of Campbell’s Americas Simple Meals and Beverages division, which includes Campbell’s soup, simple meals and shelf-stable beverage units in the US, Canada and Latin America.

The division is led by Mark Alexander, President, and includes many leading brands including Campbell’s, V8, Swanson, Prego, Pace and Plum Organics.

Founded in 1987 in Tualatin, Ore., Pacific Foods has approximately 540 employees and operates a certified organic plant where it produces its namesake products. Campbell plans to continue to operate Pacific Foods out of Tualatin.

The company will maintain its farm-to-table approach with CEO and co-founder Chuck Eggert staying on as a supplier of key ingredients through his family farms.

Eggert said: “We've spent the past 30 years focused on making nourishing foods with an emphasis on simple, organic ingredients and authentic, rich flavors. Looking ahead, a future with Campbell means we can maintain what we value while accelerating growth of the brand in a way that we couldn't do alone, reaching more people while increasing our impact on sustainable agriculture.”

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