Processed food giant Campbell Soup announced on Monday that it has agreed to acquire Rao’s pasta sauce maker Sovos Brands in a deal worth $2.7 billion.
Campbell Soup has agreed to pay $23 per share for Sovos Brands compared to the stock’s $18.02 per share close price on Friday. The deal has been approved by the Board of Directors of both companies and is expected to become official by the end of this year.
Sovos Brands is best known for its premium pasta sauce Rao’s, which represented almost 70% of the company’s annual adjusted net sales of $837 million in 2022. It also produces Michael Angelo’s frozen food and a brand of yogurt products called noosa.
Campbell Soup’s President and CEO Mark Clouse said in a statement that the addition of Sovos Brands portfolio “strengthens and diversifies” the company’s Meals & Beverages division.
“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,” Clouse added. “This acquisition fits perfectly with and accelerates our strategy of focusing on one geography, two divisions, and select key categories that we know well.”
Campbell Soup’s stock slid 1.79% on Monday in the aftermath of the acquisition. The company’s shares are down 21.10% year to date.