Campbell Soup Company to acquire Snyder’s-Lance

By Jenny Eagle contact

- Last updated on GMT

Campbell Soup Company agrees to acquire Snyder’s-Lance

Related tags: Pepperidge farm, Campbell

Campbell Soup Company has agreed to acquire Snyder’s-Lance, which distributes snacks including pretzels, sandwich crackers, kettle chips, deli snacks and organic and natural tortilla chips in the US.

Its portfolio includes Snyder’s of Hanover, Lance, Kettle Brand, KETTLE chips, Cape Cod, and Snack Factory Pretzel Crisps, and Campbell hopes to access the fast-growing convenience and natural distribution channels.

'Better for you snacks'

Snyder’s-Lance will become part of Campbell’s Global Biscuits and Snacks division, which includes the company’s 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 led by president Luca Mignini, will combine Snyder’s-Lance’s portfolio with Campbell’s snacking brands including Goldfish crackers, Tim Tam biscuits, Milano cookies and Kjeldsens butter cookies.

The acquisition is expected to close in Q2, 2018.

Denise Morrison, president/CEO, Campbell’s said the acquisition will accelerate Campbell’s strategy and is in line with its ‘real food that matters for life’s moments.’

It will provide our consumers with an even greater variety of better-for-you snacks​,” she 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.

'Dramatically transform Campbell'

This acquisition will dramatically transform Campbell, shifting our center of gravity and further diversifying our portfolio into the faster-growing snacking category​.”

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

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. 

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/CEO, Snyder’s-Lance, said the transaction unlocks the value of its portfolio, reflecting the progress it has made planning and executing its transformation.

Headquartered in Charlotte, North Carolina, Snyder’s-Lance has approximately 6,000 employees and operates 13 manufacturing centers throughout the US and UK.

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. 

Snacks to overtake soup as Campbell's largest segment

Bernstein analyst Alexia Howard noted that the deal - which will be financed with long-term and short-term debt - would increase Campbell's Debt/EBITDA ratio to 4.8x (including the Pacific Foods acquisition​).

"The increase in leverage appears to be somewhat risky especially as the outlook for Campbell's EBITDA growth is uncertain, as illustrated by the difficulty Campbell has had in negotiating its promotional strategy with Walmart this soup season. However, Campbell plans to lower the leverage ratio to ~3x by full year 2020 by suspending share repurchases in the interim."

She added: "Overall, this deal appears to be the latest attempt by Campbell to bring back growth, having experienced several tough quarters with declining sales in soup. With this acquisition, the snacks segment will overtake soup to become Campbell's largest segment (46% of sales).

"However, as Campbell is still working to return its newly acquired C-Fresh segment to profitability, it remains to be seen how successful it will be at managing this deal."

Related topics: Markets, Bakery, Snacks, Manufacturers

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