Campbell Swallows Bolthouse Farms for $1.55B; S&P Does a Spit-Take

Apparently tired of just prodding its unresponsive soup business into a turnaround, Campbell Soup made a big diversification move Monday by agreeing to acquire Bolthouse Farms for $1.55 billion. Bolthouse began in 1915 as a big carrot farm run by William Bolthouse near Bakersfield, Calif., and has scored a number of successes over the last few years in the better-for-you food, beverage and snack space — not to mention trying to put baby carrots top of mind.

By purchasing the Bolthouse brand from a private equity firm, Madison Dearborn Partners, Campbell gains a premium beverage business to complement its growing portfolio of V8 beverages as well as a fresh-carrot business that Campbell believes could be a healthy-snacking opportunity.

In addition to its implications for Campbell, the move also represents a further homogenization of America's biggest consumer-packaged-goods conglomerates, making Campbell look a little more like Kraft, PepsiCo and Coca-Cola as they all diversify strategically into more better-for-you categories.

"Bolthouse is a great strategic fit with Campbell," said Denise Morrison, Campbell's president and CEO, in a statement. "Its business platforms, capabilities and culture are well aligned with the core growth strategies we announced last year. Its strong position in the high-growth packaged-fresh category complements our chilled-soup business in North America, and offers exciting opportunities for expansion into adjacent packaged fresh segments that respond directly to powerful consumer trends."

According to the press release, Campbell plans to operate Bolthouse Farms as a separate business unit. Members of Bolthouse’s senior management team, including President and CEO Jeff Dunn, will remain with the company.

Dunn commented, “We are delighted to be joining Campbell and its family of beloved brands. Campbell’s 140-plus year history of providing high-quality foods and beverages to consumers complements Bolthouse’s history of growth and innovation in fresh and packaged fresh foods. We are excited by the alignment between our strategic visions and the significant opportunities for accelerated growth for both companies.”

Bolthouse diversified from carrots into premium juices and bottled salad dressing several years ago and surprised industry giants with its success. Now, Bolthouse effectively competes for market share atop the produce-department refrigerated-juice segment with Coca-Cola's Odwalla brand and the PepsiCo-affiliated Naked Juice.

S&P, however, wasn't impressed with the acquisition, threatening to ding Campbell's credit rating and saying the deal would prove better for Bolthouse and only "modestly modestly strengthen Campbell's business risk profile with further product diversity and access to the packaged fresh foods categories, including presence in the faster-growing refrigerated healthy beverages and salad dressings categories."

Even so, Bolthouse should provide a welcome shot of fresh possibilities for Campbell in one of Morrison's biggest moves in her short tenure at the top.