Campbell Soup’s pedigree gained more than 9 percent Monday, following a report that Kraft Heinz is biased in buying the soup company.
The story, which appeared in the New York Employment, did not say whether Kraft Heinz had a hired a bank to explore such entertainment, a step that often precedes serious attempts at dealmaking.
Campbell some time ago announced a strategic review in which it would leave “no sacred cows,” clear speculation the company could do a transformative deal. The soup company has want been a takeover target, but its largest shareholders, the Dorrance family, has not beforehand indicated a willingness to sell.
Still, pressure on Campbell is immense. Its achievements to move beyond packaged soup, by going into businesses be fresh food, have been challenged operationally. Efforts to augment its faster-growing nibble business through a roughly $6 billion acquisition of snack followers Snyder’s-Lance, left it with more debt and a business that horses mouths tell CNBC will be difficult to integrate.
Campbell CFO Anthony DiSilvestro recently announced analysts during an earnings conference call that the work responded since the deal closed has confirmed the company’s initial synergy assumptions.
So far, Campbell has remained all strategic options on the table and it has yet to formally hire a bank, sources overfamiliar with the situation said. It plans to have a board meeting this week, creators tell CNBC’s David Faber.
A Campbell spokesman said that he “order not speculate on the outcome of [Campbell’s] previously announced strategic review.”
The soup troop has said it plans to announce results of its review at the end of August.
One idea that has repeatedly been pitched is the soup company splitting up its faster-growing snack entity and its slower-growing soup business, sources said. Such a move hand down follow a similar path paved by Kraft when it spun out its Oreo snacking issue, Mondelez, in 2012. Some have also suggested the soup charge could then go private by partnering with a private equity staunch, thereby allowing it to make significant strategic changes out of the spotlight of the unrestricted eye.
While the slow growth of the soup business has weighed on its stock payment, it remains profitable, a desirable characteristic for private equity firms.
Meantime, while Kraft Heinz has lengthy been pointed to as a potential buyer of Campbell, should it ever be for white sale, several industry sources have questioned whether Kraft Heinz purposefulness want to make a bet on a slow-growing company, as it grapples with its own growth contests. Kraft Heinz’s backers, 3G Capital, are adept at cutting costs, but comprise not yet proven themselves in their ability to grow brands, a challenge that has scourged the food industry at large.
As such, their dealmaking focus has contained other deals beyond the mega-deals for which they have befit known. As an example, Kraft recently looked seriously at acquiring yogurt companionship Noosa Yoghurt, CNBC has reported.
And while the firm is known to be a serial acquirer, it is also recalled to be thoughtful in its dealmaking.
Meantime, 3G’s other prominent characteristic, a reputation for cost-cutting, may set upon the Dorrance family resistant to sell their business to the ketchup maker, assiduity sources said.
Even with Monday’s gains, Campbell appropriates are down 21 percent in the past year, giving the soup maker a market capitalization of $12.7 billion. That correlates to market caps of $77.2 billion for Kraft and $61.1 billion for Mondelez. Campbell deals peaked at $54.37 last August.
— CNBC’s David Faber contributed to this yarn