Banking & Finance November 9, 2023 12:14:23 pm

Sovos sees sales bump as regulators eye Campbell’s merger

Sovos Brands headquarters in Louisville. Ken Amundson/BizWest

By Lucas High

LOUISVILLE — Food-umbrella company Sovos Brands Inc. (Nasdaq: SOVO) saw its year-over-year sales grow by nearly a quarter in the third quarter of 2023 as the company prepares to be absorbed by soup giant Campbell Soup Co. (NYSE: CPB).

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, expects a $2.7 billion acquisition by Campbell’s to close in mid-2024, but regulators are taking a close look at the deal.

Sovos posted net sales of $257.9 million in the most recent period, up 23.5% over the third quarter of 2022.

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“Our sector-leading results were fueled by continued strength in the Rao’s franchise, which surpassed $700 million of (last 12 months) net sales and continued to make meaningful household penetration gains,” Sovos CEO Todd Lachman said in a prepared statement.

Net income was $1.4 million in the third quarter this year, down from $1.5 million in the same period last year. This year’s bottom line was “impacted by one-time costs related to the pending merger with Campbell’s,” the company said.

Late last month, “the company and Campbell’s each received a request for additional information from the U.S. Federal Trade Commission in connection with the agency’s review of the proposed merger,” Sovos said this week.

While Sovos had previously targeted December 2023 for closing, “the company now expects to complete this transaction in 2024 and will continue to engage with the FTC on its review with the objective of closing in mid-2024.”

In late September, a Sovos investor sued the companies in Boulder County District Court, accusing Campbell’s, 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 plaintiff voluntarily dismissed the case last month.