On Thursday, Campbell Soup announced that it is selling its international and fresh foods businesses. This sudden change arised due to struggles which are bing faced by the 149-year-old condensed soup maker to regain its financial footing and refocus on its signature packaged foods.
Efforts are being unwinded by the conpany which were used by former CEO Denise Morrison to branch into healthier and more fresh foods to refocus on product lines it knows well — snacks, meals and beverages. The sudden departure of Morrison was announced in May when the company said it was conducting a top-to-bottom review of its holdings after releasing what executives called “unacceptable” earnings.
On Thursday, the Shares of Campbell have lost as much as 5 percent in premarket trading but regained much of the lost ground. The company on Thursday also announced better-than-expected quarterly earnings but disappointing revenue.
The board considered a “full slate of strategic options, including optimizing the portfolio, divesting businesses, splitting the company, and pursuing a sale,” Campbell’s interim CEO Keith McLoughlin said in a statement. The board concluded that the ” best path forward” is to “focus the company on two core businesses in the North American market,” he added.
McLoughlin didn’t take a sale completely off the table, adding that Campbell “remains open and committed to evaluating all strategic options to enhance value in the future.”
The company, which also makes SpaghettiOs, Prego sauces and Goldfish snacks, said it was also raising its overall cost savings target to $945 million by fiscal 2022.
Campbell has been grappling with waning demand for its classic soup as consumers opt for healthier food.The sales of Campbell’s fresh food business, which includes Bolthouse Farms, as well as its overseas brands Arnott’s and Kelsen will help pay down the debt left behind from from its $6.1 billion acquisition of pretzel maker Snyder’s Lance earlier this year. It was reported by the sources previously that the company was looking forward to sell the units to pay down debt.
The acquisition of Snyder’s more than tripled Campbell’s debt burden to $9.6 billion at the end of the most recent quarter, from $3.1 billion a year earlier. It was one of a series of deals in the past year in which a food giant paid a big price to buy one of the few food brands that are both growing and big enough to make a dent.
The fresh food unit posted an operating loss of $7 million this quarter, still less than its $8 million loss the prior year.
According to the people in the Industry, Brands like Bolthouse Farms could attract interest from both private equity buyers and companies that have more experience managing fresh food.
Australian biscuit brand Arnott’s may similarly attract both private equity firms and corporate buyers. It could command a price tag of roughly $2 billion, say those people