Campbell to Sell Godiva

Campbell to Sell Godiva

Campbell Soup Co., owner of the famous Godiva Chocolatier brand, is putting the company on the auction block, according to people familiar with the matter, as it focuses on its soup and baked-snacks businesses.

Campbell is expected to make the announcement today, saying that it will explore strategic alternatives for the Godiva unit, which generates annual sales of $500 million via its own retail outlets, department stores and Internet sales.

Since Campbell bought the business some 40 years ago, it has successfully managed to create a refined, European image for the chocolate maker. Godiva's Web site, for instance, doesn't even mention Campbell's ownership, instead focusing on the small Belgian chocolate shop where the company was founded more than 80 years ago. That well-managed brand name is likely to attract broad interest from potential buyers, who could include everyone from private-equity firms and Persian Gulf states investors to other large food conglomerates.

The people familiar with the transaction declined to estimate a price range for the company. But a look at comparable transactions in a database from CapitalIQ showed that confectionary companies have fetched between one and 1.86 times annual sales in the last three years. Given Godiva's strong brand name, that would suggest a price somewhere from $750 million to $1 billion or more.

Campbell is selling the company because it doesn't view the unit as fitting with its current business focus. Campbell has become increasingly focused on "wellness," with the introduction of low-sodium soups containing natural sea salt, Pepperidge Farm whole-grain bread and new antioxidant-rich fruit versions of its V8 vegetable juice. Other than Pepperidge Farm cookies, Godiva chocolates are the only "indulgence" products in Campbell's portfolio. Other products under the Pepperidge Farm brand fit with the company's overall "wellness" push, but Godiva doesn't.

Campbell Chief Executive Doug Conant in February told analysts gathered for a food-industry conference in Arizona that the company's U.S. soup business "will continue to be our key focus area." When an analyst asked whether that meant the company would consider selling any businesses, Mr. Conant said he was happy with the portfolio, Godiva included, but that the company is "heavily focused" on simple meals, which include soup, and baked snacks -- two product categories that constitute 85% to 90% of Campbell's sales, depending on the quarter.

The company's low-sodium soups have contributed to the recent turnaround of its core U.S. soup business, along with new varieties of broth and new supermarket soup-can dispensers that make it easier to shop the soup aisle. Campbell is now trying to expand into Russia and China with soups and broth designed for local tastes.

Campbell's net income rose 31% to $217 million on a sales gain of 8% to $1.9 billion in its third quarter ended April 29, driven by soups and V8 beverages. Campbell has hired Centerview Partners to handle the sale.