Campbell Soup Co. (NYSE:CPB) saw its shares rise in pre-market trading following news after-hours yesterday that the food group is to buy privately-owned Pacific Foods, which makes organic soups and broths, for US$700mln in cash.
The world's largest soupmaker has been reporting weak sales as demand for packaged foods in the US has taken a hit as consumers increasingly prefer healthier options, pushing companies to invest in organic and fresh-food businesses.
Oregon-based Pacific Foods, which will become part of Campbell's Americas simple meals and beverages business, generated about US$21mln in net sales in the 12 months ended May 31.
Boost to health food options
Sales in the Campbell's America unit – its largest by revenue – fell 2% in the third quarter ended April 30.
Campbell Soup said the acquisition, which will boost its health food options, will be neutral to earnings in the first 12 months following the close.
In pre-market trading today in New York, Campbell Soup shares rose 1.6% to $52.19.