Sovos shareholders say Campbell’s acquisition is mm-mm-good to go

LOUISVILLE —Sovos Brands Inc. (Nasdaq: SOVO) shareholders on Monday approved the food-umbrella company’s $2.7 billion acquisition by Campbell Soup Co. (NYSE: CPB).

The deal, struck in early August, still needs regulatory approval before closing, which is expected before the end of 2023. 

Louisville-based Sovos, which moved to Colorado from California several years ago and controls Rao’s pasta sauce, Noosa Yoghurt and Michael Angelo’s frozen entrées, was valued at a bit more than $1 billion when it launched its initial public offering in 2021. 

Campbell will pay $23 per share to take over the company.

Wall Street has smiled on the Campbell’s take over as Sovos’ stock price has climbed nearly 30% in the past six months, much of that increase coming since August.

The deal, however, has not been without its detractors. In a lawsuit filed last month in Boulder County District Court, investor Eric Maglione charged Campbell, Sovos, its executives, directors and financial advisers with “dissemination of false and/or misleading statements to Sovos investors,” which set the stage for Campbell’s to pay less per Sovos share than the company is worth.

The acquisition, expected to close in December, may result in the elimination of some redundant administrative operations at Sovos’ Louisville headquarters and the offloading of the Bellvue-based Noosa Yoghurt brand. 

“While yogurt is not core to our strategy, we are excited that (Noosa) is performing very well with great products and strong profitability,” Clouse said in an August conference with investors.

Strong performance from Noosa allows Campbell “to be patient while we evaluate strategic alternatives,” he said. One such alternative could be jettisoning the brand from Campbell’s meals and beverages division.

Campbell, according to its chief financial officer Carrie Anderson, expects the absorption of Sovos to result in the elimination of $50 million in annual redundant costs over the next two years, much of which could to be cleaved from Sovos’ administrative operations, which, of course, are headquartered in Boulder County. 

“Our plan is to continue to build on (Sovo’s) incredible momentum, maintain its high quality standards and retain members of its talented team,” Clouse said. The specific local impact of the deal remains unknown.

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