Further diversifying its product portfolio, Campbell Soup Co. (CPB, Financial) announced Monday it is acquiring snacks company Snyder’s-Lance Inc. (LNCE, Financial) for $4.87 billion in cash.
According to the terms of the agreement, Campbell will pay $50 a share, which is an approximately 27% premium to Snyder’s closing price on Dec. 13. Snyder’s-Lance will become part of Campbell’s biscuits and snacks division, which includes its Pepperidge Farm, Arnott’s and Kelsen brands.
This acquisition marks the soup company’s largest deal in its 148-year history and is its sixth acquisition in five years. Previously, it acquired Bolthouse Farms in August 2012, organic baby food company Plum in June 2013, Kelsen in August 2013, Garden Fresh Gourmet in June 2015 and, most recently, Pacific Foods in December.
Campbell said its baked snacks portfolio generated approximately $2.5 million in net sales in 2017. With the addition of Snyder’s products, snacks would represent approximately 46% of annual net sales. Its soup portfolio would account for around 27% of sales.
Campbell President and CEO Denise Morrison said the acquisition will accelerate the company’s strategy, creating a “diversified snacking leader” that will 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,” she said. “We look forward to welcoming Snyder’s-Lance employees and their trusted family of leading brands to our company.”
The deal is expected to generate $170 million in cost synergies by the end of fiscal 2022 and annual net sales are projected to exceed $10 billion. It will also be accretive to Campbell’s adjusted earnings per share in fiscal 2019.
Snyder’s-Lance President and CEO Brian Driscoll said the deal “maximizes value” for its shareholders.
“The transaction also unlocks the value of our portfolio, reflecting the progress we have made planning and executing our transformation,” he said. “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.”
Campbell is financing the deal through $6.2 billion of debt. It is expected to close in the second quarter of 2018.
Following the announcement, Snyder’s shares jumped 6.7% to $49.95 in premarket trading. Campbell’s stock gained 1.35%. Year to date, Campbell’s stock has lost approximately 18% while Snyder’s-Lance has gained 30%.
Disclosure: I do not own any stocks mentioned.
