Options for Campbell Soup's new acquisition agenda
- May 13, 2008
||sale of non âcore business announced in May 2008
||brands and trade of Campbellâs Australian salty snacks business
||private local investors
||Campbell Soup Company (USA), worldâs largest branded soup producer
||attractive valuation, recognized brands
||focus on core categories of ready soups and simple meals
||Campbell subsequently announced focus on âacquisitions, strategic alliances and joint ventures'
Campbell seems to be tidying up its portfolio, by divesting non âcore businesses like Godiva luxury chocolates last December, and now this salty snacks business in Australia. This would classically mean that the group is setting itself up for an acquisition hunt, especially now that itâs appointed a former investment banker as its VP for corporate development. The big question is, will Campbell affirms its status as a true multinational, by going out and making a bold acquisition or two ? If so there are some obvious candidates, most notably Uncle Benâs.
Campbell, as it currently stands, is a borderline case between a true multinational, and one of those US âfocused corporates whose overseas business is mostly limited to alliances in cherry-picked geographies. On the one hand, the group has strong local brands that it acquired in Europe, notably Erasco, Germanyâs largest instant soups brand, and Liebig, Franceâs leading aseptic soups brand. On the other hand, market entry plans in Russia and China, announced last year, are limited to expansion of the Campbellâs brand through local distribution partners (a Coca-Cola bottler in the case of China).
We predict, therefore, that Campbell will acquire a big brand now, armed with the $ 850 mln that it raised by selling Godiva to Ulker Group, but that its target will not be a foreign one. The obvious candidate with that profile is Uncle Benâs, currently owned by Mars.
Glenboden earlier this month predicted that, in the wake of the acquisition by Mars of Wrigley, the former will need to divest its grocery business in order to buy out its co-financier in the deal, Berkshire Hathaway (see related article). The fit with Campbell seems very good. Both are iconic American grocery brands, that are known and distributed in over 100 countries around the world. The Uncle Benâs product range, with rice, cook-in sauces and frozen products, is highly complementary to Campbellâs soups and simple meals. Financially, although margins are under pressure in these grocery categories, the synergy benefits will be a compensating factor. Watch this space.