Campbell Soup Buys Bolthouse for $1.55 Billion to Boost Its V8

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Campbell Soup has been in hot water regarding their slipping stocks. The financial crisis and changing tastes have made their soups a little less palatable to customers, leading them to make a strategic move common among large companies lately: finance a merger. Campbell Soup Company has made its biggest business deal in purchasing Bolthouse Farms — supplier of fresh carrots, premium beverages, and salad dressing — for $1.55 Billion dollars.

The idea is to supplement the soup’s dripping stocks with reinforcing Campbell’s other breadwinner: their juice line. Though their soup has declined 2 percent this last year, to about $2.3 billion in the nine months ending in April 29, their V8 line have boosted sales 2 percent to $593 million. V8 accounts for 10 percent of Campbell’s sales.

Campbell had flirted with buying this beverage company before, but made its move only after acquiring Chief Executive Officer Denise Morrison last year. The $1.55 billion sale is about 19.6 times Bolthouse’s $79 million of its Ebit in the year ending in March 31.

  

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“It does look like it’s slightly rich,” said Erin Lash, a Chicago based analyst with Morningstar. Lash also said that “While it’s encouraging that they’re growing out their faster-growing healthy beverage business, the addition of Bolthouse doesn’t address the challenges that Campbell’s still faces in its domestic soup business.” Such issues include the changes tastes among their customers for soups.

Morrison nevertheless thinks the deal is perfect for Campbell: “Bolthouse is a great strategic fit with Campbell. Its business platforms, capabilities and culture are well aligned with the core growth strategies we announced last year.” Bolthouse will operate as it did before with its current management team. Campbell aims to take advantage of its fresh carrots and perhaps tap them for innovations regarding their V8 line.

Campbell was advised by Morgan Stanley during negations, and Bolthouse was advised by Credit Suisse Group AG and Goldman Sachs Group Inc.