Campbell Soup Co. has announced its acquisition of Sovos Brands, a US food manufacturer, in a deal valued at $2.7bn. Sovos, known for brands such as Michael Angelo’s frozen meals and Noosa yogurt, is best known for its popular brand Rao’s, which offers sauces, soups, pasta, and frozen meals. Campbell, home to Prego pasta sauces and Campbell’s soup, considers Rao’s a “premium, market-leading” brand, accounting for 69% of Sovos Brands’ net sales in 2022. This strategic acquisition aligns with Campbell’s focus on specific categories and strengthens its meals and beverages division, making it a growth-oriented leader in the food industry.
Sovos Brands, established in 2017 by Advent International, aimed to become a significant player in the US consumer goods sector by building and acquiring a portfolio of brands. It successfully acquired Michael Angelo’s Gourmet Foods and Rao’s Specialty Foods in 2017, Noosa in 2018, and Birch Benders in 2020. In 2021, Sovos went public on Nasdaq, generating net sales of $878.4m and an adjusted net income of $60.4m in 2022. The planned acquisition by Campbell places Sovos at an enterprise value of $2.7bn, representing an adjusted EBITDA multiple of 14.6 times, including expected synergies of approximately $50m.
Todd Lachman, founder, president, and CEO of Sovos, expressed confidence in the deal, expecting substantial value creation for shareholders. The boards of both companies have approved the transaction, and Campbell anticipates finalizing the acquisition by the end of the year. In pre-market trading, Campbell’s share price was $44.36, reflecting the positive market response to the announcement.
