Following the Aug 12 negotiations and a binding agreement with private equity firm, CVC Capital Partners, Campbell Soup Company (CPB) has now outlined definitive terms to sell its European simple meals business.
The company has decided to divest its selected sauces, soups and simple meals in Europe to CVC Capital for 400 million euros ($542 million). The brands to be sold include Erasco in Germany, Liebig and Royco in France, Blå Band in Sweden and Devos Lemmens and Royco in Belgium. The 4 production plants of the company located in France (Le Pontet), Sweden (Karpalund), Belgium (Puurs) and Germany (Lubeck) also form a part of the divestiture.
Additionally, the Camden, N.J.-based manufacturer of high-quality food and simple meals has made it clear that this particular transaction will not involve the company’s export business of Pepperidge Farm products throughout Europe and its businesses in the U.K., the Middle East as well as Africa. Further, Denmark-based Kelsen Group A/S, which was recently acquired by Campbell Soup, will continue with its regular operations.
This divestment is the company’s latest effort to move away from its troubled canned soup business and to enhance its presence in the packaged fresh food market. The company intends to use the proceeds from the sale to lower its debt burden and meet other general capital requirements.
The transaction is likely to close in the fourth quarter of calendar 2013, subject to the approval of the concerned European competition law authorities. The operations that are to be offloaded generated annual revenue of about $530 million in fiscal 2012.
Allen & Overy LLP will act as the financial advisor to Campbell Soup while CVC Capital will have Leopold Capital Partners, Barclays PLC (BCS), Cleary Gottlieb Steen & Hamilton LLP and Ernst & Young as its financial advisors.
Campbell Soup, which currently carries a Zacks Rank #4 (Sell), intends to boost its top line and increase returns on investment through strategic measures. During fiscal 2012, the company made significant progress in this direction, including stabilization of the North American soup and simple meal business, overseas expansion and growth of healthy beverages and baked snacks businesses. We believe that Campbell Soup’s prudent investment and strategic initiatives toward product innovation and brand building will strengthen its customer base and profitability.
Other well-performing stocks in the retail space include Pinnacle Foods Inc. (PF) and Green Mountain Coffee Roasters Inc. (GMCR). Both of them carry a Zacks Rank #1(Strong Buy).
- Consumer Discretionary
- Campbell Soup Company
- CVC Capital Partners