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Campbell Buys Plum Organics

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Campbell (NYSE: CPB  ) soup is good ... baby food. Or it soon will be.

On Thursday after close of market, Campbell Soup announced that it has agreed to acquire organic baby food manufacturer Plum Organics, the country's No. 2 brand of organic baby food, and the No. 4 baby food brand in America -- organic or otherwise.

Top Plum products include organic baby food sold in squeezable pouches, and "Plum Kids Mashups" squeezable fruit, vegetable, and Greek yogurt pouches, and also "Super Puffs" puffed snacks, and "Plum Mighty Four" snack pouches for toddlers.

Campbell did not disclose what price it will pay to acquire Plum, but price may not be an object here. Campbell grew profits at less than 6% over the past five years, and is expecting to grow a little faster than that over the next five. Therefore, the company was undoubtedly attracted more by the fact that organic baby food as a food category is growing sales 43% annually, and is already a $2 billion annual business in the U.S., than by a cheap price tag on the company.

Acquiring Plum and its $93 million annual revenue stream, Campbell says its portfolio of soups and other prepared foodstuffs for children (not necessarily organic) will rise to more than $1 billion annually. Campbell CEO Denise Morrison added that :"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."

It will not, however, affect Campbell's financial guidance for the year.

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9/28/2016 4:02 PM
CPB $54.93 Up +0.32 +0.59%
Campbell Soup CAPS Rating: **