Campbell inks deal to sell refrigerated soup factory
- Campbell Soup Co. is selling its 225,000-square-foot refrigerated soup plant in Everett, Washington, to an affiliate of the Joshua Green Corp., a private investment firm based in Seattle, according to a release. Campbell said the deal was expected to close during the third quarter, but financial terms were not disclosed.
- The Everett plant is part of the company's Fresh division, which includes Garden Fresh Gourmet and Bolthouse Farms. Campbell announced last year it plans to divest the Fresh division and its international businesses to help reduce debt and bolster its balance sheet.
- The Joshua Green Corp. is a privately-held investment company with a long history in Washington, Campbell said. It has holdings in private companies, public equities and real estate, but not much involving food. However, Joshua Green bought a controlling interest last year in Bellingham Cold Storage, which handles seafood, berries and processed products, according to The Bellingham Herald.
The sale of this plant could be the first step in relieving the struggles Campbell has faced with its Fresh division. After purchasing Bolthouse Farms in 2012 for $1.55 billion and Garden Fresh Gourmet in 2015 for $231 million, the 150-year-old company has struggled to oversee these increasingly diversified holdings while keeping focus on its core packaged food business.
Bolthouse, which makes smoothies, beverages and dressings, has suffered from crop shortages and drought, plus a protein drink recall in 2016. Garden Fresh, a producer of refrigerated salsa, tortilla chips, hummus, dips and soups, has had problems reaching beyond its customer base in the Midwest.
"It just kind of became one problem after another," Brittany Weissman, an analyst at Edward Jones, previously told Food Dive. "They just didn’t have the knowledge base and the team in place to really understand" the business or the volatility of the market.
In 2016 and again in 2017, Campbell Soup wrote down the value of the Fresh division and announced a series of cost-cutting initiatives to turn things around. Then, in late 2017, the company announced its largest acquisition ever — a $4.87 billion purchase of snack maker Snyder's-Lance — which diversified the company even more. Then-CEO Denise Morrison said the deal would "dramatically transform" the company into a snacking leader.
But in May 2018, Campbell Soup announced that Morrison was retiring from the position she'd held since 2011 and that the company planned a strategic review of its entire portfolio. Last year, the company announced its plans to sell the division and now it could be looking to sell it off in pieces given the latest move with this plant. When this $80 million plant first opened in 2007, about 350 employees were reportedly working there, so it's not a small or insignificant facility.
But there might have been bigger buyers interested. In the company's latest earnings report, the Fresh division has continued to struggle, with sales dropping 1% to $232 million compared to the year-ago period. Keith McLoughlin, former interim president and CEO, said at the time that both the Fresh and international operations had "garnered strong interest from a range of potential buyers."
These buyers could include former Bolthouse CEO Jeff Dunn and a group of investors, or potentially another large CPG manufacturer. The division has been valued at between $500 million and $700 million, although selling off the Everett soup plant would presumably lower that.
It isn't clear what Joshua Green Corp. plans to do with the factory. The company may be buying it as part of an attempt to purchase the entire refrigerated soup business. Or, it may be buying it to do more in the food business in general since it also controls Bellingham Cold Storage. According to The Bellingham Herald article about the firm's purchase of the cold storage business, Joshua Green didn't plan to change its staffing or business operations and saw the purchase as a long-term investment — which may point toward more interest in getting into the fresh soup business.
"We recognize the importance that a business plays in the life of its employees and within a community," Stanley McCammon, company president and CEO, said in a release quoted by the newspaper.
Whether the rest of Campbell Soup's Fresh division will be sold off piece by piece or in one package will likely be determined this year. Given its operational problems in the recent past, the company may want to divest all or part of the division any way it can in order to refocus and move forward with lowered debt and a healthier bottom line. Since Campbell also has activist shareholders pushing to sell the entire company, it is likely to have plenty of issues on its plate for the foreseeable future.
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