Campbell's to buy Bolthouse Farms for $1.55 billion

Camden-based Campbell Soup Co. said Monday it will spend $1.55 billion to buy Bolthouse Farms to increase its presence in the packaged fresh-food and high-end juice market.

Bolthouse Farms, which is controlled by Madison Dearborn Partners, L.L.C., is a 95-year-old company based in Bakersfield, Calif., and sells its products under its own name as well as Earthbound Farms, Green Giant and private labels.

Campbell's said the deal represents its largest-ever acquisition.

Campbell's stock-in-trade is canned soup and so-called simple meals, but the company wants to sell more products in other grocery-store aisles, so it bought Bolthouse for its bags of baby carrots, vegetable and fruit juices, and smoothies of all sort.

In turn, Campbell's hopes to appeal to younger and Hispanic consumers, who have not always grabbed cans of soup off shelves.

"A large part of this is that 'fresh' reaches across all groups — millennials, aging baby boomers who are interested in healthy eating, and Hispanics, who eat a lot of fresh fruit," Campbell's chief executive officer Denise Morrison said in an interview. "It allows you to check a lot of boxes."

Morrison said Campbell's was still looking at possible partnerships and acquisitions overseas. She also said the deal would not mean any job losses in Camden. The company recently said about 70 employees in its Cherry Hill office would be laid off in coming months.

Bolthouse had $689 million in sales in its fiscal year ending March 31.

As with its Pepperidge Farm subsidiary, Campbell's will keep Bolthouse Farms as a separate unit, with president and CEO Jeff Dunn reporting to Morrison. By keeping it separate, Morrison said, she hoped the acquisition would not distract the Campbell's staff from improving profits in soup and simple meals.

"While we applaud the firm's efforts to build out its faster-growing healthful beverage business," Morningstar's Erin Lash wrote, "the addition of Bolthouse doesn't address the challenges that Campbell still faces in its domestic soup operations."

Campbell's stock price dropped 27 cents to $32.72 in trading Monday.

Jonathan Feeney, of Janney Capital Markets, did not change his projected price of $33 for Campbell's stock, noting that Bolthouse Farm has higher revenue growth, but lower margins than Campbell's. Referring to the healthy-beverage category, he wrote, "To us, the margin structure is the question."

Consumers perceive canned products as durable, whereas fresh fruit and vegetables are more fragile. But carrots are a good vegetable to use for a greater push into that part of the grocery store, said Campbell's chief financial officer B. Craig Owens, because they are less vulnerable to weather.

"As agricultural products go," Owens said in a conference call with analysts, "carrots have a year-round growing season in California, they grow below ground, are fairly hearty and have a longer shelf life. They are more predictable."