Campbell Soup (NYSE: CPB) announced on Monday that it will buy Kettle crisps owner Snyder’s-Lance in a $4.87 billion deal.
Hoping to grow its snacks business Campbell will pay Snyder’s shareholders $50 per share in cash. This represents a premium of 27 percent of the company’s closing price on December 13.
Denise Morrison, chief executive of Campbell said: “This acquisition will dramatically transform Campbell, shifting our centre of gravity and further diversifying our portfolio into the faster-growing snacking category.”
Campbell’s acquisition of Snyder’s-Lance is the sixth takeover the company has carried out in five years. The company has seen a decline in revenues for the past five years and is hoping to expand in snacks in order to grow.
In 2012, Campbell acquired Bolthouse Farms for $1.55 billion. Earlier this month, the company finalised its acquisition of Pacific Food, which totalled$700 million.
The deal with the Pretzel owner is the soup company’s biggest deal in its 148-year history.
The deal has added a boost to the food and beverages as the industry is transformed by changing consumer tastes. Consumers are demanding snacks that are felt to be healthier and as a result, traditional makers of crisps and chocolates are exploring new brands that fit evolving tastes.
The deal is waiting for approval from Snyder-Lance’s shareholders and regulatory approval. The final acquisition is expected to close by the second quarter of 2018.
Snyder’s CEO Carl Lee Jr. stepped down earlier this year after 12 years at the snack company. Lee Jr. was replaced by Brian Driscoll, the former president of Diamond Foods.
Credit Suisse and Rothschild acted as financial advisers to Campbell Soup. Goldman Sachs and Deutsche Bank worked with Snyder’s-Lance.
Campbell Soup has said it will finance the deal with $6.2 billion of debt. In addition, the company plans to suspend share repurchases to help pay for the extra borrowing.
Snyder’s stock increased by 6.7 percent at Monday’s premarket to $49.95 per share.