Campbell Soup to buy Pacific Foods to boost health food offerings

Cans of Campbell's brand soups are seen at the Safeway store in Wheaton, Maryland February 13, 2015. REUTERS/Gary Cameron/Files

(Reuters) - Campbell Soup Co CPB.N said on Thursday it would buy Pacific Foods, which makes organic soups and broths, for $700 million in cash to boost its health food options amid changing consumer tastes.

The world’s largest soupmaker has been reporting weak sales as demand for packaged foods in the United States has taken a hit as consumers increasingly prefer healthier foods, pushing companies to invest in organic and fresh-food businesses.

Campbell, which also sells Pepperidge Farm snacks and Prego pasta sauce, created its own fresh-food unit in 2015 to sell carrots, carrot ingredients, refrigerated beverages and salad dressings, but the business has been struggling.

The soupmaker said in May it would partner with Chef’d and invest $10 million in the meal-kit company, stepping up its efforts to provide healthier foods.

Pacific Foods, which would be part of Campbell’s Americas simple meals and beverages business, had generated about $218 million in net sales in the 12 months ended May 31, Campbell said.

Sales in this unit, Campbell’s largest by revenue, dipped 2 percent in the third quarter ended April 30, partly hurt by weak demand for condensed soups and broths as well as V8 vegetable juices.

Privately-owned Pacific Foods also makes organic sauces and offers non-dairy beverages, dips, meals and sides.

Campbell said it plans to fund the deal through a combination of short- and long-term debt.

Reporting by Arunima Banerjee in Bengaluru; Editing by Martina D’Couto