The Campbell Soup Company announced that it would buy food company Bolthouse Farms from the private equity firm Madison Dearborn Partners. Campbell will pay $1.55 billion in cash to close the deal. Denise M. Morrison, Campbell’s chief executive, said in a statement, “Bolthouse is a great strategic fit with Campbell. Its business platforms, capabilities and culture are well aligned with the core growth strategies we announced last year.”
The deal is the biggest in Campbell’s history. Campbell plans to finance the deal by taking on additional debt. The deal is expected to close later this summer. Campbell was aided by Morgan Stanley and Davis Polk & Wardwell, while Bolthouse Farms was advised by Credit Suisse, Goldman Sachs, and Kirkland & Ellis.
The acquisition will allow Campbell to add to its beverage offerings, which are anchored by the V8 line of drinks. Campbell has focused on augmenting its healthy offerings as the company has struggled to prop up its soup sales over the last year. Sales have been hurt by commodity costs and changing consumer tastes. In May, Campbell reported that profit fell 5% after ingredient prices and marketing costs continued to rise.
The company said the Bolthouse acquisition would increase its adjusted net earnings for its 2013 fiscal year by about $0.05 to $0.07 a share. Excluding the deal’s costs, Campbell expects sales growth for this fiscal year to come in around the low end of its previous forecast range of up to 2%. Analysts expect that adjusted earnings per share will decline to near the upper end of its previous guidance of 5% to 7%.
Bolthouse, based in Bakersfield, California, was purchased by Madison Dearborn in October 2005. The company will continue to operate as a separate unit within Campbell and will be run by its current management team, including chief executive Jeff Dunn. Bolthouse’s products include fresh carrots, premium beverages, and refrigerated salad dressing. The company also packages carrots for various private label brands.
