Sovos Brands stock jumped 25% on Monday: here’s why

Shares of Sovos Brands Inc (NASDAQ: SOVO) are up 25% on Monday after Campbell Soup Company (NYSE: CPB) said it will buy the premium sauces maker for about $2.7 billion.

Campbell to pay $23 for each share of Sovos

The agreement values each share of the Louisville-headquartered firm that owns prominent food brands like Noosa and Rao’s at $23.

Campbell will issue new debt to finance this acquisition. Its CEO Mark Clouse said today in a press release:

Campbell Soup is expected to earn 50 cents a share in its current financial quarter versus 56 cents per share a year ago. The food stock is down 2.0% on Monday.

Sovos Brands swung to a profit in H1 of 2023

Campbell expects this deal to complete in December provided that it secures regulatory and shareholders’ approval. Boards of both companies have already nodded on the merger.

The processed food giant expects Sovos to take about two years to materially benefit its adjusted per-share earnings. Its CEO Mark Clouse also said today:

Sovos Brands ended the first six months of its fiscal 2023 with $13.2 million of net income or 13 cents per share. In comparison, it was in $26.2 million worth of loss in the same period last year.