June 9, 2015 / 12:17 PM / 2 years ago

UPDATE 2-Campbell Soup to buy salsa maker Garden Fresh for $231 mln

(Adds executive comment, updates stock movement)

By Yashaswini Swamynathan and Anjali Athavaley

June 9 (Reuters) - Campbell Soup Co said on Tuesday that it would buy salsa maker Garden Fresh Gourmet for $231 million to expand in the fresh and organic packaged foods business.

The acquisition by the world's largest soup maker is the latest among food companies, which have been buying up smaller organic counterparts as U.S. consumers increasingly prefer less-processed fare.

Hormel Foods Corp paid $775 million for natural and organic meat processor Applegate Farms LLC last month, while General Mills Inc bought organic food maker Annie's Inc for $820 million in October.

Campbell, whose shares rose 1 percent to $46.73, said in January it would reorganize its business to shift its "center of gravity," a reference to its troubled soup business.

Garden Fresh, which makes Jack's Special salsa as well as hummus and tortilla chips, will become a part of the Campbell Fresh business, which includes Bolthouse Farms.

Campbell first noticed Garden Fresh when its executives were walking the aisles of its retailers, looking for opportunities to build its portfolio of healthy snacks, Campbell Fresh President Jeff Dunn said in an interview.

In the hummus category, "Garden Fresh was the only significant brand in that space that hadn't been acquired," Dunn said. "We knew eventually the family was going to sell the business."

Ferndale, Michigan-based Garden Fresh, which Campbell said generated $100 million in net sales in 2014, was founded by Jack and Annette Aronson in 1998. Jack Aronson will be an adviser to the business after the purchase by Campbell.

Campbell bought Bolthouse Farms, which sells fresh carrots, beverages and salad dressings, for $1.55 billion in 2012.

Including Garden Fresh, the Campbell Fresh business will account for more than $1 billion in annual net sales, Campbell said on Tuesday. The company reported net sales of $6.39 billion for the nine months ended on May 3.

Morgan Lewis & Bockius LLP was Campbell's legal adviser. Garden Fresh Gourmet was advised by UHY LLP. Maddin, Hauser, Roth & Heller P.C. were its legal advisers. (Reporting by Yashaswini Swamynathan in Bengaluru and Anjali Athavaley in New York; Editing by Lisa Von Ahn)

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