Campbell Soup sells Bolthouse Farms to former CEO's private equity firm for $510M
UPDATE: April 12, 2019: Campbell Soup Co. announced it would sell its Bolthouse Farms business to an affiliate of private equity firm Butterfly Equity for $510 million. Jeff Dunn, Bolthouse's former CEO, is listed as an operating partner at Butterfly.
- Campbell Soup Co. is coming to the end of final talks to sell its Bolthouse Farms brand to an investor group headed by its former CEO Jeff Dunn, according to The Wall Street Journal and CNBC.
- Sources familiar with the deal told the Journal that the sale price will be $500 million, a steep drop from the $1.55 billion Campbell paid for the brand in 2012. Those familiar with the deal say it could be finalized as soon as this week.
- Campbell has also shed some of its other business units recently including its Fresh Division's refrigerated soup factory and Garden Fresh Gourmet. The company is also in the process of selling off some of its international businesses, which includes Arnott's and Kelsen biscuit brands.
For seven years, Campbell Soup has been brought down by its Bolthouse Farms brand. Since it was purchased in 2012, Bolthouse Farms — a maker of carrots, smoothies, juices and dressings — has faced weather challenges and a voluntary recall due to spoilage. Even when partnered with Garden Fresh in Campbell Soup’s Fresh Division, there was nothing but strife for the brand. In its second-quarter earnings report in February, Campbell Soup reported a loss due to a $346 million write down of its Fresh Division. According to Reuters, this is the fourth time Campbell Soup has written down the unit since September 2016, reducing its value in total by $1.35 billion.
Ridding the company of this acquisition will likely set a fresh stage for new CEO Mark Clouse, who assumed his role in January. Without the unwieldy Fresh Division to worry about, Clouse can get down to brass tacks and help the company focus on its core snacks and soup, which was bolstered by the $4.9 billion acquisition of Snyder's-Lance. Already, this strategy has proved to be a bright spot for the company. Campbell Soup's sales increased 24% to $2.71 billion in its fiscal second quarter, topping analyst expectations as it benefited from recent acquisitions.
The additional cash flow from the sale will also allow the soup mogul to pay down a good portion of the debt it took on to purchase the snack company. As pressure from activist investor Daniel Loeb hovers, Campbell is looking to find even more cash flow to turn things around for shareholders.
At the same time the company has been working to sell off Bolthouse Farms, it is in talks to sell its international business which includes Arnott’s and Kelsen biscuit brands. However, that may not be going as smoothly. Although Mondelez reportedly submitted a bid to buy the international business several weeks ago, insiders say the companies are in a stalemate over the price. Campbell was hoping for $3 billion in order to significantly pay down its debt.
For Bolthouse Farms though, it seems to be more or less smooth sailing as the brand seems to be returning home to its former leader. Selling the smoothies and carrots to former CEO Dunn might be exactly what it needs to get back on its feet. In 2012, Bolthouse Farms had $100 million in annual revenue, but now it’s losing money.
Butterfly seems to be getting the business for a good deal too, since it is buying the brand a much lower price that what Dunn sold it for years ago. So if Dunn can help market the brand to consumers the way he did originally, the deal could be more lucrative for him.