Campbell acquiring Snyder’s-Lance for $4.7b

Snacking will represent approximately 46% of Campbell’s annual net sales.

Campbell Soup Co. and Snyder’s-Lance announced this week  that the companies have entered into an agreement for Campbell to acquire Snyder’s-Lance for $50.00 per share in an all-cash transaction totaling $4.7 billion. The purchase price represents a premium of approximately 27% to the closing stock price for Snyder’s-Lance on Dec. 13, 2017, the last trading day prior to media reports regarding a potential transaction.

The acquisition, which has been approved by the boards of directors of both companies, will enable Campbell to expand its portfolio of leading snacking brands, the company said.

Snyder’s-Lance is a leading snack company that manufactures and markets snack foods throughout the U.S. Its portfolio includes well-known brands such as Snyder’s of Hanover, Lance, Kettle Brand, KETTLE chips, Cape Cod, Snack Factory Pretzel Crisps, Pop Secret, Emerald and Late July. Snyder’s-Lance has leading market positions in its core categories, including pretzels, sandwich crackers, kettle chips, deli snacks and organic and natural tortilla chips.

Campbell’s said the acquisition of Snyder’s-Lance combines the strengths of both organizations to drive sales growth and expand Campbell’s footprint in the $89 billion U.S. snacking market, which had a three-year compound annual growth rate (CAGR) of nearly 3%.

The acquisition will enhance Campbell’s access to faster-growing distribution channels, including the convenience and natural channels, the company added.

“The acquisition of Snyder’s-Lance will accelerate Campbell’s strategy and is in line with our purpose: ‘Real food that matters for life’s moments.’ It will provide our consumers with an even greater variety of better-for-you snacks,” Campbell’s president and chief executive officer Denise Morrison said. “ The combination of Snyder’s-Lance brands with Pepperidge Farm, Arnott’s and Kelsen will create a diversified snacking leader, drive sales growth and create value for shareholders. This acquisition will dramatically transform Campbell, shifting our center of gravity and further diversifying our portfolio into the faster-growing snacking category. We look forward to welcoming Snyder’s-Lance’s employees and their trusted family of leading brands to our company.”

Campbell's product portfolio of baked snacks generated approximately $2.5 billion in net sales in fiscal 2017. With the addition of the complementary product portfolio of Snyder’s-Lance, snacking would represent approximately 46% of Campbell’s annual net sales (previously 31%) on a pro forma basis. Campbell’s soup portfolio, incorporating the recently acquired Pacific Foods, would represent approximately 27% of the company’s annual net sales.

“Following a thorough review process of strategic options, we believe this transaction maximizes value for our shareholders through an immediate and certain cash premium,” Brian Driscoll, president and CEO of Snyder’s-Lance, said. “The transaction also unlocks the value of our portfolio, reflecting the progress we have made planning and executing our transformation. We are excited to join Campbell and to continue to provide great products to our consumers with an uncompromising focus on ingredients, quality and taste.”

Creating a snack leader

Snyder’s-Lance will become part of Campbell’s Global Biscuits & Snacks division, which includes the Pepperidge Farm, Arnott’s and Kelsen businesses and the simple meals and shelf-stable beverages business in Australia, Asia Pacific and Latin America. The division is led by president Luca Mignini. The division will combine the Snyder’s-Lance portfolio with Campbell’s iconic snacking brands such as Goldfish crackers, Tim Tam biscuits, Milano cookies and Kjeldsens butter cookies.

"Campbell’s expertise in brand building, (research and development) and supply chain and operations, coupled with Snyder’s-Lance’s well-known portfolio, distribution system and history of strong sales growth, will allow us to create a differentiated, branded snacking business with greater scale,” Mignini said. “The combined portfolio will be even more relevant to consumers who are increasingly seeking better-for-you snacks.”

Headquartered in Charlotte, N.C., Snyder’s-Lance has approximately 6,000 employees and operates 13 manufacturing centers throughout the U.S. and U.K.

Approvals and financing

Campbell plans to finance the acquisition through $6.2 billion of debt, comprising a combination of long-term and short-term debt. Pro forma leverage is expected to be 4.8x at closing, and the company said it is committed to deleveraging to approximately 3x by fiscal 2022. Campbell will suspend share repurchases to maximize free cash flow for the purposes of paying down debt. Campbell also expects to maintain its current dividend policy.

The closing of the transaction is subject to the approval of Snyder’s-Lance shareholders as well as customary regulatory approvals and other closing conditions. Certain members of the Warehime family, who collectively own 13.2% of the outstanding common stock of Snyder’s-Lance, have agreed to vote their shares in support of the transaction. Closing is anticipated by early in the second quarter of 2018. Campbell expects the acquisition to be accretive to adjusted earnings per share in fiscal 2019, excluding integration costs and costs to achieve synergies.

This is Campbell’s sixth acquisition in five years. The company acquired Bolthouse Farms in August 2012, organic baby food company Plum in June 2013, biscuit company Kelsen in August 2013, fresh salsa and hummus maker Garden Fresh Gourmet in June 2015 and organic broth and soup producer Pacific Foods in December 2017.

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