Campbell to buy Rao's premium sauces maker Sovos for $2.33 billion
(Reuters) -U.S. packaged food maker Campbell Soup (NYSE:CPB) will buy Michael Angelo's and Rao's owner Sovos Brands for $2.33 billion in cash, the company said on Monday, beefing up its meals and beverages business with the maker of premium Italian sauces.
Campbell will pay $23 per share for Sovos, a nearly 28% premium to the stock's last close.
Sovos' shares jumped 24.3% in premarket trading, while Campbell slipped 1.9%.
The global food and beverage industry has been a relatively bright spot for deal-making in recent quarters. Last month, Unilever (NYSE:UL) said it would buy frozen yogurt brand Yasso in North America while Mars Inc agreed to buy Kevin's Natural Foods.
In May, Campbell Soup sold Emerald Nuts to Flagstone Foods for an undisclosed amount.
Packaged food makers have been buoyed as cautious consumers have preferred to spend on essentials and limit their visits to restaurants. They have also raised product prices several times to protect their margins from higher input costs.
Separately, Sovos reported a 16.3% jump in organic net sales for the second-quarter, driven by increased volumes despite higher pricing.
Including debt, the deal is valued at $2.7 billion. Campbell plans to finance the purchase through new debt.
The transaction, expected to close by the end of December, is likely to add to adjusted earnings per share by the second year after completion.
Sovos said Campbell would have to pay $145 million in case of termination of the deal.
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