Campbell Soup Company (CPB) recently announced that it had signed a deal with private equity firm, CVC Capital Partners to offload its European operations. The terms of the deal, however, were not disclosed by Campbell Soup.
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 divestment includes Campbell Soup’s brands of sauces, soups and easy meals. Some of these brands are 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 forms part of the divestiture.
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.
The transaction is likely to close in first-quarter fiscal 2014, 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 #3 (Hold), 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 lead to an increase in its customer base and profitability.
Other well-performing stocks in the retail space include Dole Food Company Inc. (DOLE) and Chiquita Brands International Inc. (CQB). Both of them carry a Zacks Rank #1(Strong Buy).
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