Campbell Soup CEO Mark Clouse told CNBC's Jim Cramer on Monday that his company's acquisition of Rao's sauce maker Sovos Brands is one of the best growth stories in the food business.
"This is a juggernaut," he said of Campbell, which in addition to its namesake soups also owns numerous snack brands including Pepperidge Farm and Snyder's-Lance. "Now you bring a meals and beverage business that's adding the best growth story in food, and I think it really solidifies our position as one of the most compelling stories in dependable growth-driven earnings for the future."
Campbell will buy Sovos in a deal valued at $2.7 billion, the company said Monday, paying $23 per share. Along with Rao's, Sovos also owns yogurt brand Noosa and frozen food brand Michael Angelo's. However, the premium Italian sauce brand is Sovos' money maker, representing 69% of its adjusted net sales in 2022, the company said.
Clouse said the acquisition was an opportunity to drive Sovos' household penetration, or the portion of households reached by the products. He said the business is currently at 14% household penetration, while the benchmark for a premium brand is around 20%.
"So our ability to take what is a great foundation at Sovos, add what we do really well, which is driving that awareness and building household penetration, is another great runway for growth down the road," Clouse said.
Campbell stock was down about 1.8% by Monday's close, while Sovos was up a little over 25%.
Sign up now for the CNBC Investing Club to follow Jim Cramer's every move in the market.
Questions for Cramer?
Call Cramer: 1-800-743-CNBC
Want to take a deep dive into Cramer's world? Hit him up!
Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram
Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com