High-quality foods and simple meals manufacturer, Campbell Soup Company (CPB - Analyst Report) has successfully sold its European simple meals business to a private Equity firm, CVC Capital Partners. The latter has paid 400 million euros ($542 million) for Campbell’s select sauces, soups and simple meals in Europe.
Campbell and CVC Capital agreed to the deal on Oct 1, following negotiations made on Aug 12. The sale deal includes Campbell’s European sauces, soups and simple meals brands, namely 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 form a part of the divestiture.
Additionally, the Camden, NJ-based manufacturer made it clear that the transaction does 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.
This divestment is the company’s latest effort to move away from its troubled canned soup business and enhance its presence in the packaged fresh food market. The company intends to use the proceeds from the sale to lower its debt burden and meet other general capital requirements.
The operations that are to be offloaded generated annual revenue of about $530 million in fiscal 2012.
Allen & Overy LLP acted as the financial advisor to Campbell Soup while CVC Capital had Leopold Capital Partners, Barclays PLC (BCS - Analyst Report), Cleary Gottlieb Steen & Hamilton LLP and Ernst & Young as its financial advisors.
Campbell Soup, which currently carries a Zacks Rank #5 (Strong Sell), 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 strengthen its customer base and profitability.
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