Campbell Soup Company is set to acquire Snyder’s-Lance, whose portfolio includes Kettle brand, Kettle chips and Emerald, for $50.00 per share in an all-cash transaction, in a bid to expand its portfolio of snacking brands.
The acquisition is expected to combine 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 deal has been approved by the boards of directors of both companies and is also expected to accelerate Campbell’s access to faster-growing distribution channels including the convenience and natural channels.
Snyder’s-Lance, which also owns Snyder’s of Hanover, Lance, Cape Cod, Snack Factory Pretzel Crisps, Pop Secret and Late July, reported $2.2 billion in net sales for the trailing 12 months ended 30th September.
Denise Morrison, Campbell’s president and chief executive officer, commented: “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.”
With the addition of Snyder’s-Lance’s portfolio, snacking would represent approximately 46% of Campbell’s annual net sales (previously 31%) on a pro forma basis. Campbell’s soup portfolio, including the recent acquisition of Pacific Foods, would represent approximately 27% of the company’s annual net sales.
Brian J. Driscoll, president and chief executive officer of Snyder’s-Lance, added: “The transaction 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.”
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 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.