Campbell Soup Co. (NYSE:CPB) announced it has entered into an agreement to acquire Plum Organics, a leading provider of premium, organic foods and snacks that serve the nutritional needs of babies, toddlers and children. The company is based in Emeryville, Calif. Plum is the No. 2 brand of organic baby food in the U.S. and is currently the No. 4 baby food brand overall.
Baby food is an approximately $2 billion category in the United States. From 2010 to 2012, the premium and organic segments grew at an average annual rate of 43 percent.
The acquisition of Plum will provide Campbell with an attractive platform to extend its core categories of simple meals, snacks and beverages and enhance its access to a new generation of consumers. Plum’s products have strong distribution in key customer channels, including online, natural and baby specialty outlets. With the addition of Plum Organics' products, Campbell’s portfolio of kids-focused soups, beverages and snacks will have annual sales of more than $1 billion.
Denise Morrison, Campbell’s president and CEO said, “Plum Organics’ nutritious, on-trend products are a great addition to our North American portfolio of leading brands. The acquisition will help deliver on our dual mandate to strengthen our core businesses and to expand into faster-growing categories and adjacencies. It represents another step toward our long-term goal of shifting Campbell’s center of gravity.”
Plum, started in 2007 by cofounder Neil Grimmer, has used rapid innovation to launch over 150 products for babies, toddlers and kids in the United States and the United Kingdom.
Grimmer said, “Plum was founded by a group of parents on a mission to give the very best food to our little ones. To date, we’ve made a huge impact serving over 200 million organic meals and snacks. Joining the Campbell family will allow us to amplify our mission to reach even more little ones on a global scale. We look forward to building an exciting future together.”
Top Plum products include organic baby food in convenient squeezable pouches; Super Puffs, a line of bite-sized nutritious puffed snacks; Plum Mighty Four, a new line of nutritious toddler snack pouches; and Plum Kids Mashups, a line of fun squeezable fruit, veggies and Greek yogurt.
Campbell plans to operate Plum as a standalone business within its Campbell North America division. Senior members of Plum Organics’ management team, including Grimmer, will join Campbell, and continue to lead Plum and its mission-driven culture from Emeryville. As president of Plum, Grimmer will report to Mark Alexander, president of Campbell North America.
Alexander said, “Plum Organics has deep connections and strong appeal with young parents. We believe that the combination of Plum’s brands and unique products with Campbell’s brand-building capabilities, consumer insights expertise and supply chain resources will help accelerate the brand’s growth.”
Plum Organics generated $93 million in gross sales for the year ended Dec. 31, 2012. Financial terms of the transaction were not disclosed. The acquisition will not affect Campbell’s previously-announced fiscal 2013 guidance.
Campbell will fund the acquisition through available credit. The closing of the transaction is subject to regulatory approvals and customary closing conditions and is expected to occur in the fourth quarter of fiscal 2013.
Davis Polk & Wardwell served as Campbell’s legal counsel. Plum was advised by Houlihan Lokey, and Jones Day acted as legal counsel.