The Campbell Soup Company announced Monday it is acquiring Sovos Brands, which makes the popular pasta sauce Rao's, with an all-cash $2.7 billion offer.
Campbell's said acquiring Rao's "adds a high-growth, market-leading premium portfolio of brands to diversify and enhance Campbell’s Meals & Beverages division." Campbell's added that the acquisition provides it with a "substantial runway for sustained profitable growth."
According to Campbell's, Sovos Brands had $837 million a year in net sales in 2022. The soup maker said it hopes with the acquisition to have a $1 billion annual sauce business.
"We’re thrilled to add the most compelling growth story in the food industry and welcome the talented employees who have built a nearly $1 billion portfolio," said Campbell’s President and CEO Mark Clouse. "This acquisition fits perfectly with and accelerates our strategy of focusing on one geography, two divisions and select key categories that we know well. Our focused strategy has enabled us to deliver strong results over the last five years, enhance our brands and capabilities, and generate strong cash flow to lower debt."
Rao's pasta sauce originated from the 1896 opening of the infamous Rao's restaurant in New York City. As the restaurant's popularity grew to the point where reservations were tough to come by, the restaurant began selling its sauce in 1992. In the 31 years since, it has become one of America's top-selling pasta sauces.
In addition to Rao's, Sovos Brands previously owned Noosa yogurt and Michael Angelo's frozen meals.
Sovos Brands' Todd Lachman credited the company's rapid growth for its merger.
"Today marks a momentous occasion for Sovos Brands as we announce our plans to join the Campbell’s family," Lachman said. “We have built a one-of-a-kind, high growth food company focused on taste-led products across a portfolio of premium brands, anchored by the Rao’s brand. Our success would not have been possible without the incredibly talented and passionate team at Sovos Brands, which has been instrumental in building one of the fastest-growing food companies of scale in the industry today."
Officials from the two companies said they expect the merger to be completed by the end of the year, pending regulatory approval.
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