M&A among packaged and organic foods continues with Campbell Soup Co.'s (NYSE: CPB) acquisition of Garden Fresh Gourmet for $231 million.
Just two weeks after Hormel Foods (NYSE: HRL) announced its $775 million purchase of Applegate Farms, an organic and natural meat distributor, Camden, New Jersey-based Campbell inks a deal for Garden Fresh, a company known for its organic salsa, hummus, dips and tortilla chips. The acquisition comes as Campbell — which Mergers & Acquisitions ranked as one of seven savvy strategic buyers in 2013 — explores avenues beyond the soup business and into other growing segments of the food industry.
With Garden Fresh, Campbell gains all of the company's assets, including the company's four Michigan locations. The target makes salsa out of its Ferndale-based headquarters, tortilla chips out of Grand Rapids and dips in Inkster. The company ships products out of the Taylor location.
Garden Fresh, founded by Jack Aronson in 1998, has grown over the years, generating $100 million in sales in 2014. In the early 2000s, Aronson bet on the growing demand for fresh, refrigerated salsa with fresh ingredients, and convinced local and regional grocery stores to stock his products in their deli sections.
Campbell’s has been tweaking its offerings for a while. In 2011, the company exited Russian operations just four years after expanding into the market. And in 2013, it sold a slate of brands - Devos Lemmens, Royco, Liebig and Deli Soup - to CVC Capital Partners.
The company hopes to make money from Garden Fresh as soon as 2016, with the deal closing, pending regulatory approval, by the end of 2015. Up to about 95 percent of Garden Fresh's 500 employees are expected to join Campbell's. The business will be folded into Campbell's "fresh division," which includes Bolthouse Farms carrots and refrigerated soups — a product line it purchased in 2012.
Philadelphia law firm Morgan Lewis & Bockius LLP advised Campbell on the deal.