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Campbell Soup Company (CPB - Analyst Report) recently announced its plans to acquire Denmark-based Kelsen Group A/S from Maj Invest – a private equity firm and several other investors. The strategic acquisition will boost Campbell Soup’s growth prospects in the Chinese and Hong Kong market as well as increase its global footprint.

The U.S.-based manufacturer of high-quality food and simple meals has not disclosed the financial details of the transaction. The company however expects the acquisition to be accretive at the beginning of 2014.

Kelsen Group has a history of producing quality baked snacks for over 75 years. Over the years, the company has expanded its distribution network to Asia, South America, Africa, the Middle East and the U.S. and presently operates in 85 countries. Given its worldwide presence, we believe that Kelson Group will be a strategic fit for Campbell Soup’s long-term growth.

Moreover, the acquisition will facilitate Campbell Soup to increase its market share in the baked snacks category, particularly in China where Kelsen Group is the market leader in the sweet biscuits category. Notably, this category’s growth rate in China exceeds that of the $60 billion global sweet biscuits market.

Kelsen Group's presence in the Chinese market goes back to over 20 years, with its Kjeldsens brand being popular among retailers and consumers in major cities. Significantly, over the past 3 years, the brand’s sales have grown up at a compounded rate of over 28%.

Campbell Soup, which competes with Flowers Foods, Inc. (FLO - Snapshot Report) and J&J Snack Foods Corp. (JJSF - Snapshot Report), intends to operate Kelsen Group as a separate business under its Campbell International division. In 2012, Kelsen Group’s net sales were $180 million, growing at a compound double-digit rate since 2009.

In the past few months, Campbell Soup has been aggressively focusing on strategic acquisitions to expand its international presence as well as brand range. Earlier this month, following the footsteps of The Hain Celestial Group, Inc. (HAIN - Analyst Report), the company forayed into the premium organic baby food category by acquiring Plum Organics. We believe that the acquisition will enhance Campbell Soup’s product categories and enable it to reach out to a wider range of customers.

Campbell Soup, which currently carries a Zacks Rank #2 (Buy) 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.

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