Recently the company known for its hearty soups Campbell Soup (NYSE:CPB) was finding it hard through a sales drop as consumers is now looking out for a more natural products, has settled to takeover a company that makes organic soup and broth for reported $700 million.
According to reports, the proposed agreement to takeover Pacific Foods of Oregon will be financed with debt. The Tualatin, Oregon-based maker of organic foods reportedly made revenue of $218 million over the last year.
Almost century n half year old Campbell Soup (NYSE:CPB), is famous for canned goods. The company has been going through a difficult period with shifting consumer tastes and is likely to post declining sales for a third successive year. The firm has faltered with moves into carrot farming and protein drink production since its 2012 purchase of Bolthouse Farms.
This takeover of Pacific Foods will give it more products in a faster-growing category, according to Ken Shea, an analyst at Bloomberg Intelligence. “Organic is definitely where the customer is going,” he said.
Currently sales of canned food products that have ruled grocery stores for years, are waning amid broad shifts in how consumers eat and shop.
During yesterday’s trading, Camden, New Jersey-based Campbell stock surged 1.8 percent to $52.61 in New York. The stock has came down 15 percent this year, closing Thursday at $51.68.
In year 2012 Campbell Soup (CPB)reportedly acquired Bolthouse, which is a producer of carrots, juices and salad dressings for more than $1.50 billion. That business, failed to impress with poor harvests and a drink recall.
“The acquisition allows us to expand into faster-growing spaces such as organic and functional food,’’ Denise Morrison, Campbell’s president and CEO said in a statement.
Moreover the agreement still needs to get endorsement from regulators before finally concluded.