Campbell Soup Company is hoping a deeper push into salty snacks can help end a prolonged sales slump.
The nearly 150-year-old company, struggling as consumers turn away from canned soup, has agreed to buy Snyder’s-Lance for about $4.9 billion in cash, giving it brands including Cape Cod potato chips, Snyder’s pretzels and Pop Secret popcorn.
The purchase will add to Campbell’s earnings in fiscal 2019, the soup-maker said Monday.
The deal gives Campbell more heft in a category where sales have gained, in contrast with the broader industry. While soup has slumped, sales of Goldfish crackers have helped boost results. Salty snacks have posted growth in each of the past four years, according to Bloomberg Intelligence.
“This acquisition will dramatically transform Campbell, shifting our centre of gravity and further diversifying our portfolio into the faster-growing snacking category,” Campbell’s CEO Denise Morrison said in a statement.
The $50-a-share price represents a 27% premium to Snyder’s-Lance stock on 13 December, before media reports of a possible acquisition. Shares of the snack maker climbed as much as 6.9% to the offer price Monday in New York trading.
Campbell and the rest of the ten largest packaged-food companies in the US have seen about $16 billion in revenue evaporate over the past three years. That’s comes as consumers seek out more fresh food, typically found on the perimeter of the grocery store.
One exception has been salty snacks, which have remained popular with customers despite the push toward healthy eating. Snyder’s-Lance is expected to post a fourth straight year of higher sales.
Campbell has stumbled in previous attempts to update its stable of brands, particularly with a push into fresh food. The company’s 2012 purchase of Bolthouse Farms has been marred by a product recall and struggles in that unit’s carrot farming business.
In July, Campbell announced a $700 million deal to buy Pacific Foods of Oregon, which makes organic soup and broth.
It also invested $10 million in the meal-kit startup Chef’d earlier this year. Through that partnership, Campbell has started touting recipes that feature its products.