Campbell Soup Company, Camden, NJ, and Snyder’s-Lance, Charlotte, NC, have entered into an agreement for Campbell to acquire Snyder’s-Lance for $50.00 per share in an all-cash transaction. The purchase price represents a premium of approximately 27% to Snyder’s-Lance’s closing stock price on Dec. 13, 2017, the last trading day prior to media reports regarding a potential transaction. The acquisition, which has been approved by the Boards of Directors of both companies, will enable Campbell to expand its portfolio of leading snacking brands.

Snyder’s-Lance is a leading snacking company that manufactures and markets snack food throughout the U.S. The company’s portfolio includes well-known brands such as Snyder’s of Hanover, Lance, Kettle Brand, KETTLE chips, Cape Cod, Snack Factory Pretzel Crisps, Pop Secret, Emerald and Late July. Snyder’s-Lance has leading market positions in its core categories including pretzels, sandwich crackers, kettle chips, deli snacks and organic and natural tortilla chips (IRI MULO through Sept. 3, 2017, for the last 52 weeks).
 
Combining these companies strengths of both organizations to drive sales growth and expand Campbell’s footprint in the $89 billion U.S. snacking market, which had a three-year compound annual growth rate (CAGR) of nearly 3% (IRI Market Structure 2016 and Total US MULO).
 
Snyder’s-Lance reported $2.2 billion in net sales for the trailing 12 months ended Sept. 30, 2017. From calendar 2012-2016, Snyder’s-Lance net sales grew at an 11.5% CAGR; organic net sales outpaced category growth with a 4% CAGR. The acquisition of Snyder’s-Lance will accelerate Campbell’s access to faster-growing distribution channels including the convenience and natural channels.
 
Denise Morrison, Campbell’s president and chief executive officer, said, “The acquisition of Snyder’s-Lance will accelerate Campbell’s strategy and is in line with our Purpose, ‘real food that matters for life’s moments.’ It will provide our consumers with an even greater variety of better-for-you snacks. The combination of Snyder’s-Lance brands with Pepperidge Farm, Arnott’s and Kelsen will create a diversified snacking leader, drive sales growth and create value for shareholders. This acquisition will dramatically transform Campbell, shifting our center of gravity and further diversifying our portfolio into the faster-growing snacking category. We look forward to welcoming Snyder’s-Lance’s employees and their trusted family of leading brands to our company.”
 
Campbell’s baked snacks product portfolio generated approximately $2.5 billion in net sales in fiscal 2017. With the addition of Snyder’s-Lance’s complementary portfolio, snacking would represent approximately 46% of Campbell’s annual net sales (previously 31%) on a pro forma basis. Campbell’s soup portfolio, including the recent acquisition of Pacific Foods, would represent approximately 27% of the company’s annual net sales.
 
Brian J. Driscoll, president and chief executive officer of Snyder’s-Lance, said, “Following a thorough review process of strategic options, we believe this transaction maximizes value for our shareholders through an immediate and certain cash premium. The transaction also unlocks the value of our portfolio, reflecting the progress we have made planning and executing our transformation. We are excited to join Campbell and to continue to provide great products to our consumers with an uncompromising focus on ingredients, quality and taste.”
 
Creating a ‘Snacking Leader’
Snyder’s-Lance will become part of Campbell’s Global Biscuits and Snacks division, which includes the company’s Pepperidge Farm, Arnott’s and Kelsen businesses, and the simple meals and shelf-stable beverages business in Australia, Asia Pacific and Latin America. The division is led by Luca Mignini, president. The division will combine Snyder’s-Lance’s portfolio with Campbell’s iconic snacking brands including Goldfish crackers, Tim Tam biscuits, Milano cookies and Kjeldsens butter cookies.
 
Mr. Mignini said, “Campbell’s expertise in brand-building, R&D, and supply chain and operations, coupled with Snyder’s-Lance’s well-known portfolio, distribution system and history of strong sales growth, will allow us to create a differentiated, branded snacking business with greater scale. The combined portfolio will be even more relevant to consumers who are increasingly seeking better-for-you snacks.”
 
Headquartered in Charlotte, NC, Snyder’s-Lance has approximately 6,000 employees and operates 13 manufacturing centers throughout the U.S. and U.K.
 
Approvals and Financing
Campbell plans to finance the acquisition through $6.2 billion of debt comprising a combination of long-term and short-term debt. Pro forma leverage is expected to be 4.8x at closing, and the company is committed to deleveraging to approximately 3x by fiscal 2022. Campbell will suspend share repurchases to maximize free cash flow for the purposes of paying down debt. Campbell also expects to maintain its current dividend policy.
 
The closing of the transaction is subject to the approval of Snyder’s-Lance shareholders, as well as customary regulatory approvals and other closing conditions. Certain members of the Warehime family, who collectively own 13.2% of Snyder’s-Lance’s outstanding common stock, have agreed to vote their shares in support of the transaction. Closing is expected by early second quarter of calendar 2018. Campbell expects the acquisition to be accretive to adjusted EPS in fiscal 2019, excluding integration costs and costs to achieve synergies.
 
Credit Suisse acted as lead financial adviser to Campbell in this transaction. Rothschild also acted as a financial adviser to Campbell. Weil, Gotshal & Manges LLP acted as Campbell’s legal counsel. Goldman Sachs & Co. LLC acted as lead financial adviser to Snyder’s-Lance. Deutsche Bank has also acted as long-time financial adviser to Snyder’s-Lance. Jenner & Block LLP acted as legal counsel to Snyder’s-Lance.
 
Reshaping Campbell’s Portfolio
This is Campbell’s sixth acquisition in five years. The company acquired Bolthouse Farms in August 2012, organic baby food company Plum in June 2013, biscuit company Kelsen in August 2013, fresh salsa and hummus maker Garden Fresh Gourmet in June 2015, and organic broth and soup producer Pacific Foods in December 2017.