U.S. News

Campbell Soup to Shop Chocolate-Maker Godiva


Campbell Soup said Thursday that it was exploring strategic alternatives for Godiva Chocolatier that included selling it, and analysts said there could be many suitors for the well-known luxury brand.


The decision to explore strategic alternatives for the business came as part of the largest U.S. soup maker's review of its portfolio, which also includes Pepperidge Farms cookies and crackers and V8 vegetable juice.

"The premium chocolate business does not fit with Campbell's strategic focus on simple meals -- including soup --baked snacks and vegetable-based beverages," Douglas Conant, Campbell's president and chief executive, said in a news release.

But the business could fit with several other companies, including Hershey, Cadbury Schweppes , Mars and Wm. Wrigley Jr. Wrigley, in fact, had tried to enter the U.S. chocolate business in 2002, only to see its $12.5 billion agreement to buy Hershey fall apart.

Analysts said Godiva could attract a price of more than $1 billion. Godiva has annual sales of about $500 million out of Campbell's total of more than $7.3 billion.

"My sense is that there will be interest among all the large confectionary businesses," Mitchell Corwin, an analyst who covers the confectionery business at Morningstar, said.

The higher-end chocolate business has become more competitive in recent years, with company's such as Hershey selling more premium products at grocery stores and convenience shops. At the same time, Godiva's chocolate shops face growing competition from shops like Mars's Ethel's chocolate lounge.

"There are a lot of players trying to get a piece of this attractive part of the market," Corwin said. "But not all these players has the type of brand recognition that Godiva has in this country."

But Matt Arnold, a food industry analyst at Edward Jones, cautioned that Godiva is largely a retailer with more than 400 stores and that retail margins typically tend to be lower than those of candy makers.

"Unless you pay a very smart price, you can actually dilute the returns of your own business by buying that," Arnold said, adding that Godiva could instead be bought by a luxury retailer.

Spokesmen for Hershey and Wrigley declined to comment on whether their companies would be interested in buying Godiva. Spokesmen for Mars and Cadbury could not be reached for comment.

Campbell said it has retained Centerview Partners as its financial adviser.

Campbell shares were down 30 cents at $36.65 on the New York Stock Exchange. Through Wednesday, the stock was down 5 percent this year, compared with 3.8 percent increase for the Standard & Poor's packaged-foods index.