Campbell Soup Co., the world’s largest soup maker, may use proceeds from its biggest debt sale since 2002 to finance acquisitions and repay short-term debt.
The company sold $400 million of seven-year notes at a yield of 3.1 percent, or 65 basis points more than similar- maturity Treasuries, according to data compiled by Bloomberg. A basis point is 0.01 percentage point. Proceeds will be used for general corporate purposes, including financing future acquisitions or repaying commercial-paper borrowings, the Camden, New Jersey-based company said in a regulatory filing.
“We are seeking acquisitions that complement our businesses in simple meals, baked snacks and healthy beverages,” Anthony Sanzio, a Campbell’s spokesman, said in an e-mail. “One of our business strategies is to strengthen our business through outside partnerships and acquisitions.”
The maker of Pepperidge Farm cookies and Prego Italian sauces has said it plans to be “aggressive” in seeking takeover opportunities after cutting its sales forecast for the second straight year. Campbell’s last purchase was breadmaker Ecce Panis Inc., announced in April 2009. The soup company has $1.7 billion of bonds maturing in the next five years, Bloomberg data show.
Campbell “seems to be edging closer to a possible bolt-on acquisition,” according to an e-mailed comment by Craig Hutson, senior investment-grade analyst at Gimme Credit LLC, an independent corporate bond research firm. The company has “good financial flexibility” with access to a revolving loan, he said.
Last Debt Sale
The $1.5 billion revolver was unused as of May 2, except for $25 million of standby letters of credit, according to a June 10 filing with the U.S. Securities and Exchange Commission. The company had $945 million of short-term borrowings coming due by May 2, 2011, the filing shows.
Campbell last sold debt in June 2009, issuing $300 million of 3.375 percent senior unsecured notes that yielded 3.39 percent, or 87.5 basis points more than similar-maturity Treasuries, Bloomberg data show. Today’s offering is the company’s biggest since it issued $400 million of 10-year notes in November 2002, the data show.
Barclays Plc, BNP Paribas and JPMorgan Chase & Co. managed the offering, according to the filing.
Campbell’s 4.5 percent notes due in 2019, the closest maturity date to the new issue, traded June 24 at 108.28 cents on the dollar to yield 3.385 percent, or 29.6 basis points more than similar-maturity Treasuries, according to Trace, the bond- price reporting system of the Financial Industry Regulatory Authority.