In a lawsuit* (details HERE) filed against Pacific Foods in August, plaintiff Michael Lynch (representing the estate of his father, former Pacific Foods shareholder Ed Lynch) had argued that Pacific Foods redeemed his father’s shares at a value “vastly less than true fair market value” when he died in 2015.
The $700m price tag Campbell Soup said it would pay in July 2017 was “higher than the 2015 redemption valuation by an order of magnitude,” added the suit. “[Yet] there were no changes at Pacific Foods between 2015 and 2017 that justify or explain the vast difference...”
In a statement issued late September, Campbell Soup said the legal action posed a potential impediment to the deal. However, Tuesday afternoon, it told FoodNavigator-USA that, “All litigation has been resolved to our satisfaction, and has enabled us to move forward to close the acquisition today.”
A spokeswoman for Pacific did not say whether - or how much - money had changed hands, but told us: “The parties have amicably resolved their respective claims, without admission of any fault or liability of any party.”
She added: “The parties have agreed to resolve their differences to avoid the uncertainty and continued expense of litigation, but more importantly to honor the legacy of Edward and Virginialee Lynch.”
Under the deal, Pacific Foods will become part of Campbell's Americas Simple Meals and Beverages division (Campbell's, V8, Swanson, Prego, Pace and Plum Organics, led by Mark Alexander) but will continue to be run from its HQ in Tualatin, Oregon.
Joe Folds, who joined Campbell Soup in 1997 and was most recently VP, Strategy, Business Development and Global Brands, Global Biscuits and Snacks, has been named VP and General Manager, Pacific Foods.
While Pacific Foods has national distribution, teaming up with Campbell Soup would help it expand into more conventional accounts and boost its marketing, brand-building, R&D and customer service capabilities, said the company.
“Campbell plans to invest in the business to drive growth. Campbell expects to expand distribution; boost marketing support for brand building; and invest in R&D and the supply chain to deliver operations and customer service excellence. Campbell will immediately begin to integrate Pacific Food's key functions.”
Founded in 1987, Pacific Foods is best known for its shelf-stable plant-based beverages and organic broths and soups, and generated approximately $232m in trailing twelve-month net sales as of November 2017.
*The case is Michael Lynch v Pacific Foods of Oregon Inc et al 17-cv-36090