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Business Combinations and Asset Acquisitions
6 Months Ended
Jan. 26, 2025
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]  
Acquisition Acquisition
On August 7, 2023, we entered into a merger agreement to acquire Sovos Brands, Inc. (Sovos Brands) for $23.00 per share. On March 12, 2024, we completed the acquisition. Sovos Brands' portfolio includes a variety of pasta sauces, dry pasta, soups, frozen entrées, frozen pizza and yogurts, all of which are sold in North America under the brand names Rao’s, Michael Angelo’s and noosa. See Note 4 for additional information on the noosa yoghurt business. Total purchase consideration was $2.899 billion, which was determined as follows:
(Millions)
Cash consideration paid to Sovos Brands shareholders(1)
$2,307
Cash paid for share-based awards(2)
32
Cash consideration paid directly to shareholders$2,339
Cash paid for transaction costs of Sovos Brands 32
Repayment of Sovos Brands existing indebtedness and accrued interest486
Total cash consideration$2,857
Fair value of replacement share-based awards(3)
42
Total consideration$2,899
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(1)    Consideration paid to Sovos Brands shareholders which reflects $23.00 per share.
(2)    Represents cash paid to equity award holders of Sovos Brands restricted stock and restricted stock unit awards attributable to pre-combination service. This excludes $3 million of cash paid that was recognized as expense.
(3)    We issued replacement equity awards in settlement of certain Sovos Brands equity awards that did not become vested in connection with the acquisition. The portion of fair value of the replacement awards attributable to pre-combination service was $42 million and is included in the purchase consideration. We recognized $26 million of expense related to accelerated vesting of certain replacement awards in the third quarter of 2024.
The cash portion of the acquisition was funded through a 2024 Delayed Draw Term Loan Credit Agreement of $2 billion and cash on hand.
The table below presents the fair value that was allocated to acquired assets and assumed liabilities:
(Millions)Estimated Fair Value
Cash$240 
Accounts receivable96 
Inventories130 
Other current assets
Plant assets100 
Other intangible assets1,776 
Other assets16 
Total assets acquired$2,363 
Accounts payable$96 
Accrued liabilities56 
Accrued income taxes
Long-term debt
Deferred taxes407 
Other liabilities11 
Total liabilities assumed$580 
Net assets acquired$1,783 
Goodwill1,116 
Total consideration$2,899 
The excess of the purchase price over the estimated fair values of identifiable net assets was recorded as $1.116 billion of goodwill. The goodwill is not deductible for tax purposes. The goodwill was primarily attributable to future growth
opportunities, anticipated synergies, and intangible assets that did not qualify for separate recognition. The goodwill is included in the Meals & Beverages segment.
The identifiable intangible assets of Sovos Brands consist of:
(Millions)Type Life in YearsValue
TrademarksNon-amortizableIndefinite$1,470 
Trademarks(1)
Amortizable2076 
Customer relationships(2)
Amortizable20to30230 
Total identifiable intangible assets$1,776 
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(1)Includes $74 million related to the noosa yoghurt business.
(2)Includes $18 million related to the noosa yoghurt business.
Excluding the assets of the noosa yoghurt business held for sale, as of January 26, 2025, the weighted-average remaining useful life of amortizable intangible assets was 29 years.
We incurred $10 million and $19 million of costs associated with the acquisition in the three- and six-month periods ended January 28, 2024.
For the three- and six-month periods ended January 26, 2025, the Sovos Brands acquisition contributed $313 million and $623 million to Net sales and a loss of $9 million and $12 million to Net earnings, respectively, including the effect of integration costs and interest expense on the debt to finance the acquisition.
The following unaudited summary information is presented on a consolidated pro forma basis as if the Sovos Brands acquisition had occurred on August 1, 2022:
Three Months EndedSix Months Ended
(Millions)January 28, 2024January 28, 2024
Net sales$2,760 $5,551 
Net earnings attributable to The Campbell's Company$196 $411 
The pro forma results are not necessarily indicative of the combined results had the Sovos Brands acquisition been completed on August 1, 2022, nor are they indicative of future combined results. The pro forma amounts include adjustments to interest expense for financing the acquisition, to amortization and depreciation expense based on the estimated fair value and useful lives of intangible assets and plant assets, and related tax effects. The pro forma results include adjustments to reflect amortization of the acquisition date fair value adjustment to inventories, expenses related to accelerated vesting of replacement awards and severance and retention bonuses as of August 1, 2022.