Campbell Soup to buy snacks maker for €4.12 bn

Campbell’s will finance the acquisition through long and short term debt

Soupmaker Campbell will buy Pretzels and Cape Cod chips maker Snyder’s-Lance. Photograph: iStock

Soupmaker Campbell will buy Pretzels and Cape Cod chips maker Snyder’s-Lance. Photograph: iStock

 

Campbell Soup on Monday said that it would buy Snyder’s-Lance, the company behind Kettle potato crisps and Pop-Secret popcorn, as it seeks to grow its snack business and combat cooling soup sales.

The soup-maker said on Monday that it would acquire Snyder’s-Lance for $50 a share in an all-cash transaction — about $4.87 billion — and represents a premium of about 27 per cent to its closing price on December 13th, before reports of the takeover surfaced.

Campbell’s baked snacks business posted $2.5 billion in net sales in fiscal 2017 and the combined snacks portfolio of both companies would generate about $4.7bn in net sales on a pro forma basis. North Carolina-based Snyder’s-Lance will become a part of Campbell’s global biscuits and snacks division, which includes Pepperidge Farm and Arnott’s biscuits.

“This acquisition will dramatically transform Campbell, shifting our center of gravity and further diversifying our portfolio into the faster-growing snacking category,” Denise Morrison, chief executive, said.

Campbell plans to finance the acquisition through $6.2bn of debt and plans to suspend share repurchases to boost its free cash flow to help pay down debt.

The crispmaker’s acquisition marks Campbell’s sixth takeover in five years as it seeks to revive sales. Indeed, the company’s revenues have declined for three consecutive years and it has guided for net sales to be flat or down as much as 2 per cent in fiscal 2018.

The transaction is subject to approval by Snyder-Lance’s shareholders and regulatory approval and is expected to closed by early second quarter of 2018.

Snyder-Lance’s shares were up more than 5 per cent in pre-market trade to $49.80.

– Financial Times Service