Campbell Soup has reached an agreement to buy Pacific Foods, an Oregon-based producer of broths and soups, for $700 million in cash, Campbell announced. The move is seen as a continuation of Campbell’s response to shifting consumer tastes.
“This evolution of the consumer wanting nutritious products has really played right to what we’re really good at,” Pacific Foods CEO and founder Chuck Eggert told Fortune.
Campbell CEO Denise Morrison said: “Pacific is an authentic brand with a loyal consumer following. The acquisition allows us to expand into faster-growing spaces such as organic and functional food.” She said the companies shared similar values and philosophical approaches and were an excellent fit strategically.
The companies said Pacific Foods had approximately $218 million in trailing twelve-month net sales as of May 31, 2017.
After the deal, Pacific would become part of Campbell’s Americas Simple Meals and Beverages division, led by Mark Alexander. Eggert would stay on as a supplier of key ingredients through his family farms. “The supply side of organic is more complicated than selling,” he said. Campbell signaled the company would keep its base in Oregon.
The deal is Campbell’s fifth acquisition in five years as the company continues to reshape its portfolio. The company acquired Bolthouse Farms in 2012, organic baby-food company Plum and biscuit company Kelsen in 2013, and fresh salsa and hummus maker Garden Fresh Gourmet in 2015.
The organic foods market grew 8.4% to $43 billion in sales last year, according to the Organic Trade Association. It’s one of the few sectors of the consumer packaged goods industry that has seen growth, Fortune said.
Campbell said it plans to fund the acquisition through a combination of short-term and long-term debt.