Campbell Soup and Emerald nuts
Once Campbell Soup acquires Snyder's-Lance, snacks will represent 46% of Campbell Soup’s annual sales while soup will represent about 28% of sales.

CAMDEN, N.J.  —  The proposed acquisition of Snyder’s-Lance, Inc. by the Campbell Soup Co. that was announced Dec. 17 achieves two goals for the company — it expands Campbell Soup’s presence in the rapidly growing market for better-for-you snacks, and it lessens the importance of soup on the company’s overall performance.

Once the transaction is completed snacks will represent 46% of Campbell Soup’s annual sales while soup will represent about 28% of sales.

“ …The macro snacking trend is quite literally becoming the way we eat today,” said Denise Morrison, president and chief executive officer, during a Dec. 17 call with financial analysts to discuss the acquisition. “The lines between snacks and meals are blurring. Snacking occasions are expanding rapidly and even extending in traditional meals.

Denise Morrison

“Ninety per cent of consumers snack multiple times per day. In the U.S., more than 50% of all eating occasions are snacks, and nearly half of U.S. consumers replace meals with snacks at least 3 to 4 times per week. It’s no wonder that snacking is an $89 billion market in the U.S., with a 3-year compound annual growth rate of approximately 3%.”

Under the agreement, Campbell Soup will acquire Snyder’s-Lance for $50 per share, which equates to an enterprise value of $6.1 billion, according to the company. The snack maker reported $2.2 billion in sales for the 12 months ended Sept. 30, 2017.

Snyder’s-Lance was formed in 2010 through the merger of Lance and Snyder’s of Hanover. The company has expanded in recent years through the acquisitions of Snack Factory and Diamond Foods. Management is headquartered in Charlotte, N.C., and the business has approximately 6,000 employees and operates 13 manufacturing plants throughout the United States and United Kingdom.

Snyder's-Lance product portfolio

Campbell Soup management expects to achieve $170 million in cost synergies. The synergies are expected to come in several parts of the company, including manufacturing, procurement, and sales, marketing and administration.

“Summarizing, we have a detailed cost synergy plan and we are confident in our ability to achieve the $170 million target,” said Anthony P. DiSilvestro, chief financial officer. “To achieve this synergy, complete the transaction and integrate the business, we estimate one-time cost of $275 million to $325 million.”

An integration challenge facing Campbell Soup will be direct-store delivery (D.S.D.). Campbell Soup has two systems for its Pepperidge Farm snacks and bakery businesses. The acquisition of Snyder’s-Lance will add a third D.S.D. system to the mix.

Campbell Soup Pro Forma

“The commonality are all of these systems have independent business owners or independent distributor operators,” Ms. Morrison said. “So, we’re very familiar with how to reach the potential of these systems. I think as we get to know the companies, we will be looking at potential synergies. We believe those exist mostly in the area of depots and warehousing.”

Ms. Morrison called the acquisition of Snyder’s-Lance “transformational” for Campbell Soup.

“The combination of Campbell’s iconic brands at Pepperidge Farm, Arnott’s and Kelsen with Snyder’s-Lance complementary portfolio will create a diversified snacking leader and provide consumers with an even greater variety of better-for-you snacks,” she said. “We’re excited about this transaction and confident that it will create significant shareholder value.”