Campbell Soup will buy Sovos Brands for $2.7 billion, including popular sauce brand Rao’s.
“We’re thrilled to add the most compelling growth story in the food industry and welcome the talented employees who have built a nearly $1 billion portfolio,” said Mark Clouse, the president and CEO of Campbell’s, in an Aug. 7 press release. “This acquisition fits perfectly with and accelerates our strategy of focusing on one geography, two divisions and select key categories that we know well.”
The sale price reflects a $23 per share cash deal reached by the companies – double Sovos’s $12 IPO in September 2021.
Campbell said Sovos Brands and Rao’s “adds a high-growth, market-leading premium portfolio of brands to diversify” and will provide “a substantial runway for sustained profitable growth.” The company also said its “supply chain excellence” and “expertise in retail execution” will drive more sales of Sovos Brand products.
Rao’s Homemade sauce was initially created in a 127-year-old tavern in East Harlem. Frank Pellegrino Sr., who appeared in Goodfellas and who owns Rao’s Tavern, began selling the sauce in 1991. Sovos Brands acquired the sauce business in 2017 and sales rapidly increased.
"Today Rao's is more than nine times bigger than when we acquired it in 2017," said Sovos Chief Growth Officer Yuri Hermida, per Business Insider. "The brand has exceeded $600 million in sales on a 12-month basis, but we firmly believe we can become a billion-dollar brand.”
According to the executive, one in eight American households buys Rao’s sauce. In 2022, the sauce brand reported $580 million in sales – the majority of which occur at Costco or Walmart.
Sovos Brands reported $837 million in annual adjusted net sales in 2023. While the majority of its business is generated by Rao’s, Sovos owns Michael Angelo’s and Noosa which sell dry pasta, soups, frozen entrees and yogurt.
Todd Lachman, Founder, President and Chief Executive Officer of Sovos Brands, Inc. called the announcement of the sale a “momentous occasion.”
“We have built a one-of-a-kind, high growth food company focused on taste-led products across a portfolio of premium brands, anchored by the Rao’s brand,” Lachman said in the joint statement. “Our success would not have been possible without the incredibly talented and passionate team at Sovos Brands, which has been instrumental in building one of the fastest growing food companies of scale in the industry today.”
"This transaction is expected to create substantial value for our shareholders, resulting in a 92% increase from our 2021 IPO price. As one of the most trusted and respected food companies in North America, I’m confident in Campbell’s ability to continue bringing our products to more households and further building on our track record of growth and success for years to come," added Lachman.
Campbell’s will add the company to its Meal & Beverage division, which includes its canned soups, dinner sauces, gravies and tomato juice.
According to Fox Business, the deal is on track to formally close in December pending the approval of the Sovos Brand stockholders, regulatory approvals and other customary conditions. The boards of directors of both businesses have signed off on the sale.
