FTC wants more information from Campbell Soup on its $2.7B Sovos Brands deal

Dive Brief:

• Campbell Soup said the Federal Trade Commission asked the CPG company for more information about its proposed $2.7 billion acquisition of Sovos Brands, the maker of the premium Rao’s pasta sauce.
• The Prego and Goldfish cracker maker said it “will continue to engage with the FTC on their review.” Campbell Soup now expects the deal to close in mid-2024 instead of this year.
• The New Jersey-based soup and snacks giant announced in August it would buy Sovos in an effort to expand its presence in meals and premium offerings. 

Dive Insight:

The review by the FTC is likely focusing on an overlap that would occur if Campbell, which already owns the mainstream brand Prego, added another pasta sauce brand in Rao’s. Campbell said in a statement that the request for more information by the FTC was “a common feature of the regulatory review for transactions of this type.” 

An analyst with TD Cowen said the acquisition would increase Campbell’s market share of the pasta sauce category to 36.3% from 19.3%, bringing it close to what the regulator would consider “moderately consolidated and subject for increased review.” Still, the firm said there is a “low probability of successful litigation” by the FTC and that despite the extra steps the agency “will not sue to block the deal.”

Campbell’s premium business in its meals and beverage portfolio would climb above 25% compared to 10%. Sovos, which went public in 2021, has been growing rapidly behind Rao’s. The brand accounted for 69% of its adjusted net sales last year. “Sovos Brands is the most compelling growth story food right now,” Mick Beekhuizen, president of meals and beverages at Campbell, told Food Dive in August.