As part of the initiatives to streamline operations and achieve financial stability, Campbell Soup (NYSE: CPB) continues to dump its fresh food business. Weeks after selling the Garden Fresh Gourmet business unit, the troubled soup maker is reportedly close to divesting the Bolthouse Farms division to a consortium of investors headed by former chief executive Jeffrey Dunn.
If the parties clinch a deal, the investor group will buy Campbell-owned Bolthouse Farms for approximately $500 million, which is just one-third of the price at which the company bought the business seven years ago.
Campbell’s board of directors is expected to ratify the divestiture as early as this week. Bolthouse has been making losses consistently in the past few years. The downturn of the once-profitable business division exacerbated in recent years due to the poor farm output due to unfavorable weather conditions and the management’s inability to handle the complexities involved in dealing with farm-based food business that is often unpredictable.
If the parties clinch a deal, the investor group led by former CEO Jeffrey Dunn will buy Bolthouse Farms for approximately $500 million
Meanwhile, the latest move contrasts with the strategy introduced by former chief executive officer Denise Morrison, which focuses on making investments in the profitable areas of the fresh food sector and reducing dependence on the weakening soup business.
Related: Campbell Soup Company Q2 2019 Earnings Conference Call Transcript
The management is likely to use the proceeds from the recent sales and the one under discussion to repay debt, which hit a new high after Campbell acquired a snack company in a high-value deal a few months ago, using external funding.
Going through one of the worst phases in its history, Campbell is slowly getting back on track after being battered by mismanagement and financial indiscipline, which at one point had brought the company to the brink of putting itself up for sale.
Campbell shares closed Thursday’s session up 1.35% and gained further during the extended session. The stock has moved up 23% so far this year.