Premier Foods Buys Campbell’s UK in “competitive” auction
Published July 12th, 2006
Premier Foods Plc agreed to buy Campbell Soup Co.’s U.K. and Irish unit for about $845 million to add products including Homepride cooking sauces, Batchelors instant soups and Fray Bentos canned meats.
The acquisition will be funded mainly by issuing new shares, raising 450 million pounds, St. Albans, England-based Premier Foods said today in a statement. Campbell, located in Camden, New Jersey, said March 24 that it may sell the division because it hadn’t met growth expectations.
Premier Foods, the maker of Sun-Pat peanut butter and Branston pickle, is continuing a strategy of acquisitions that has helped fuel sales in the past two years. Campbell, the world’s biggest soupmaker and owner of the Pepperidge Farm brand, is emulating H.J. Heinz Co. and Sara Lee Corp. by selling European divisions as rising discount competition weighs on earnings.
“This acquisition will bring an excellent portfolio of powerful and iconic brands which we intend to drive forward with increased resource and innovation,” Premier Foods Chief Executive Officer Robert Schofield said in the statement.
Shares of Premier Foods rose 6.75 pence, or 2.2 percent, to 316.25 pence at 8:44 a.m. in London. Campbell stock rose 38 cents, or 1 percent, to $37.91 in New York Stock Exchange composite trading yesterday. The British food producer’s shares have dropped 3 percent in the past year as Campbell added 25 percent.
Campbell, which has roots going back to 1869, called its British and Irish businesses “highly fragmented” when it unveiled the possible sale in March. The unit, with sales of about $480 million, accounted for 29 percent of revenue from international soups and sauces last year.
