Campbell Soup Co (NYSE:CPB), the famous soup maker, saw shares nudge higher on Monday as it unveiled a deal to buy Pretzels and Kettle Chips maker Snyder’s-Lance Inc (NASDAQ:LNCE) for a whopping US$4.87bn to expand its snack business amid flagging soup sales.
It will pay Snyder’s shareholders US$50 per share in cash - a 27% premium to Snyder’s close on Wednesday.
READ: Campbell Soup's results leave bad taste in shareholders' mouths
Campbell shares added 0.63% to US$49.90, while Snyder's added nearly 7% to US$49.99.
The @Campbells #soup #company is #buying @Snyders_Hanover for $50 per #share in an all #cash #deal#valued at $4.9B. #mergers #acquisitions #divestitures #money #finance #Campbells #Snyders #Lance https://t.co/GqXxCxIBaH
— Alicia Renee Pettine (@AllAboutAlish) December 18, 2017
Campbell told investors that it plans to finance the acquisition through a combination of long- and short-term debt of US$6.2bn.
Campbell's baked snacks product portfolio generated around US$2.5bn in net sales in fiscal 2017. With the addition of Snyder’s-Lance’s portfolio, snacking would represent around 46% of Campbell’s annual net sales (previously 31%) on a pro forma basis.
“The acquisition of Snyder’s-Lance will accelerate Campbell’s strategy and is in line with our Purpose, ‘real food that matters for life’s moments.’ said Denise Morrison, Campbell’s president and chief executive.
"It will provide our consumers with an even greater variety of better-for-you snacks."
READ: Campbell Soup takes the healthy option with US$700mln purchase of Pacific Foods
She added: "This acquisition will dramatically transform Campbell, shifting our center of gravity and further diversifying our portfolio into the faster-growing snacking category."
Brian J. Driscoll, Snyder’s-Lance chief, added: "Following a thorough review process of strategic options, we believe this transaction maximizes value for our shareholders through an immediate and certain cash premium."
Earlier, Hershey Co (NYSE:HSY), the chocolate giant, announced a US$921mln deal to buy Amplify Snack Brands Inc’s (NYSE:BETR) Skinny Pop popcorn maker.
The acquisition was seen as a move to bolster Hershey's healthy snacks division.