(Bloomberg) -- Campbell Soup Co., struggling through a sales slump as consumers seek out more natural products, has agreed to buy a company that makes organic soup and broth for $700 million.
The deal to acquire Pacific Foods of Oregon will be financed with debt, Campbell said on Thursday. The Tualatin, Oregon-based maker of organic foods generated revenue of $218 million over the last year.
Campbell, the nearly 150-year-old company known for canned goods, has struggled with changing consumer tastes and is expected to post declining sales for a third consecutive year. The Camden, New Jersey-based company has stumbled with moves into carrot farming and protein drink production since its 2012 purchase of Bolthouse Farms.
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The acquisition of Pacific Foods will give it more products in a faster-growing category, according to Ken Shea, an analyst at Bloomberg Intelligence. “Organic is definitely where the customer is going,” he said.
Sales of canned soup, like those of other packaged-food products that have dominated grocery stores for decades, are flagging amid broad shifts in how consumers eat and shop.
Campbell shares rose less than 1 percent to $51.83 in New York on Friday. The stock has slipped 15 percent this year through the close of trading on Thursday.
Campbell acquired Bolthouse -- a producer of carrots, juices and salad dressings -- in 2012 for $1.55 billion. That business, now part of the Campbell Fresh unit, has struggled with poor harvests and a drink recall. Last September, Chief Executive Officer Denise Morrison said Campbell had restructured the fresh-food unit and removed several senior Bolthouse managers in a bid to turn the business around. Bolthouse's issues were “unacceptable,” she said.
Now, Campbell is pushing hard into organic soup. With the acquisition of Pacific Foods, it says it's getting a company with a “sustained track record of growth.”
“The acquisition allows us to expand into faster-growing spaces such as organic and functional food,” Morrison said in Thursday's statement.
To contact the reporter on this story: Craig Giammona in New York at cgiammona@bloomberg.net.
To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Jonathan Roeder, Brendan Case
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