Campbell Soup Co. announced that it has entered into an agreement to acquire Pacific Foods of Oregon for $700 million in cash.
Founded in 1987, Pacific Foods is a leading producer of organic broth and soup and also produces shelf-stable plant-based beverages and other meals and sides. Pacific Foods has a sustained track record of growth and generated approximately $218 million in trailing 12-month net sales as of May 31, 2017.
Campbell’s said Pacific Foods is a pioneer in the natural foods industry that has 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. The acquisition will also further Campbell’s 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 company said.
Organic food is an $11 billion-plus category in the U.S. with a compound annual growth rate of 15.3% over the past four years.
“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,” said Denise Morrison, Campbell president and chief executive officer. “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, Morrison said 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 expects to expand distribution, boost marketing support for brand building to engage consumers and shoppers and invest in research and development and the supply chain to deliver operations and customer service excellence.
Pacific Foods will become part of Campbell’s Americas Simple Meals & Beverages division, which includes Campbell’s soup, simple meals and shelf-stable beverage units in the U.S., Canada and Latin America. The division is led by president Mark Alexander and includes many leading brands, such as 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 that produces its namesake products. Campbell plans to continue to operate Pacific Foods out of Tualatin, and CEO and co-founder Chuck Eggert will stay 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."
This is Campbell’s fifth acquisition in five years as the company continues to reshape its portfolio for growth. It acquired Bolthouse Farms in 2012, organic baby food company Plum and biscuit company Kelsen in 2013 and salsa and hummus maker Garden Fresh Gourmet in 2015. This acquisition is the latest in a series of moves Campbell has made to diversify its portfolio in response to increased consumer interest in health and well-being.
Campbell plans to fund the acquisition through a combination of short-term and long-term debt; the acquisition is not subject to any financing condition. The transaction is subject to regulatory approvals and customary closing conditions. Campbell expects the acquisition to be neutral to earnings in the first 12 months after closing, excluding certain purchase accounting adjustments and transaction and integration costs.