Buying snack company Snyder's-Lance for $4.9 billion

Credit Suisse and Rothschild acted as financial advisers to Campbell Soup.

Shares of Campbell Soup and Snyder's-Lance have risen after a report that the soup company is in advanced talks to buy the pretzel maker.

The deal will give Campbell a group of brands including Snyder's of Hanover, Kettle Brand and Pop Secret.

Campbell Soup says the acquisition of Snyder's-Lance will accelerate its access to quickly growing avenues for distributing its goods, including convenience stores. Those were created to move Campbell into fresher-food categories seen by its leadership as more in line with today's consumers, though management frequently highlighted snacks as a target for expansion. Most of its other holdings are soup and sauce brands.

Like all consumer giants, Campbell's attempts to move fresher are hindered by the relatively few number of large-scale deals that can make an immediate impact.

Four percent is not bad, said Mitchell B. Pinheiro, who works in portfolio management and research at Costello Asset Management Feasterville and has followed Campbell for many years.

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The deal with the Pretzel owner is the soup company's biggest deal in its 148-year history. A spat with Walmart over pricing and shelf space contributed to the drop.

With the acquisition, Campbell would get "nearly half" of its annual net sales from snacks, while only a quarter would come from more sluggish soup lines, noted Campbell President and CEO Denise Morrison.

Campbell is paying a 27% premium on Snyder's-Lance's stock price and is taking on more than $6 billion in debt to finance the purchase. Earlier this month, the company finalised its acquisition of Pacific Food, which totalled$700 million.

The Wall Street wagon just keeps on rolling on with United States benchmarks reaching new highs at the open on Monday after a higher close on Friday as the passing of the USA tax reform bill is now in sight.

Campbell now gets about 31 percent of its sales from snacks and 35 percent from soup, the company said.

  • Regina Holmes