Campbell Soup (CPB) is back in the acquisition game — and this time it's for pricier pasta sauce.
The king of chicken noodle soup said on Monday it would pay $2.7 billion — or $23 a share — to acquire Rao's pasta sauce maker Sovos Brands. The purchase price represents a 27% premium to Sovos Brands' closing price on Friday.
It marks Campbell's largest acquisition since it plunked down $4.87 billion to buy pretzel leader Snyder's-Lance in 2018.
Rao's — which went public in 2021 — will join a Campbell sauce portfolio consisting of lower priced Prego and Swanson broths. The company posted $878.4 million in net sales last year and $67.8 million in net income.
This year, Wall Street was expecting Sovos Brands to post net sales and net income of $941.4 million and $75 million, respectively.
A source familiar with the matter tells Yahoo Finance that Sovos' pipeline of future products and Rao's strong growth were the determining factors in doing the deal.
Campbell Soup CEO Mark Clouse said on a conference call Sovos was a "perfect fit", while downplaying concerns the integration would be a distraction.
Sovos Brands shares rose 25% to $22.56 in trading on Monday morning. Campbell Soup shares fell 2% to $44.43 likely as investors fretted over the deal being financed with new debt.
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email [email protected].
Read the latest financial and business news from Yahoo Finance