Advent International backed Sovos Brands has agreed to acquire Rao's Specialty Foods, the owner of Rao's Homemade pasta sauce made from natural ingredients.
The transaction is expected to be completed during the third quarter of this year. Financial terms were not disclosed.
Rao's Specialty Foods is the second acquisition in less than six months for Sovos, which seeks to acquire and build value in one-of-a-kind food and beverage brands. In January 2017, the company purchased Michael Angelo's Gourmet Foods, a leading producer of premium, authentic frozen Italian entrées.
Headquartered in Berkeley, CA, and led by seasoned consumer packaged goods executives, Sovos focuses on high-quality brands in on-trend categories with the potential to accelerate growth by investing in distribution, marketing, production and product innovation.
Rao's Homemade is an iconic brand with a storied heritage dating back to the opening of Rao's Italian restaurant in East Harlem, New York, in 1896. Established in 1992, Rao's Specialty Foods produces super premium pasta sauce, known for its commitment to the highest quality ingredients, clean label and superior taste profile.
Rao's Homemade contains no tomato blends, paste, water, starches, fillers, colors or added sugar like many of the other leading brands. In addition to sauces, the company offers a selection of premium dry pasta, dressings, marinades, olive oils, vinegars, tomatoes and fire-roasted red peppers.
"Rao's Specialty Foods is a great addition to the portfolio we are creating of one-of-a-kind brands in the food and beverage sector," said Todd Lachman, President and CEO of Sovos Brands. "Its unwavering commitment to authentic, delicious-tasting products using only the highest quality ingredients aligns with our strategy of partnering with unique brands that are in demand with discerning consumers. Working alongside the company's talented management team, we see numerous opportunities to grow the Rao's Homemade brand and expand Rao's Specialty Foods into adjacent food categories."
"We are thrilled to join the Sovos Brands family," said Eric Skae, Chief Executive Officer of Rao's Specialty Foods. "Since 1992 we have been the leading brand in the premium pasta sauce category by a wide margin, and as we enter our 25th year, we are committed to maintaining our top position in the space. With the resources and expertise of Sovos and Advent, we will be in an even stronger position to pursue the significant growth opportunities ahead of us. We look forward to expanding our product offering and introducing more consumers to the authentic taste of our pasta sauces and other specialty foods."
Jim Morano, President of Rao's Specialty Foods, added, "As we continue to grow the business, we will remain true to our co-founder Frank Pellegrino Sr.'s vision for our recipes, which as Frank said, is 'to use the fewest number of ingredients and take the fewest number of steps. Good cooking is simple. It's called 'pulito' – Italian for 'pure, clean.' That's the right way to cook. That's what we do. That's how we do it.'"
Spearheading the acquisition and value creation initiatives at Sovos Brands is a team headed by Mr. Lachman, Larry Bodner, CFO, and Bill Johnson, Chairman. Mr. Lachman has a 25-year record of delivering growth and value creation as a senior executive at major consumer products companies, including Mars, Del Monte Foods, H.J. Heinz and Procter & Gamble.
Mr. Bodner has over 25 years of experience as a performance-driven financial executive at companies including Big Heart Pet Brands, Del Monte Foods, Walt Disney and Procter & Gamble. Mr. Johnson was formerly chairman, CEO and president of H.J. Heinz, where he had a distinguished 31-year career, transforming the company into a global food industry leader.
"Sovos Brands is making great progress on its strategy to establish a scale player in the consumer packaged goods industry," said Jeff Case, a Managing Director at Advent International. "We continue to work with the Sovos team to support and grow its brands and acquire other leading branded players offering delicious food that meets today's consumer demand for high-quality, clean ingredients."
The transaction does not include the iconic Rao's restaurants in New York, Las Vegas and Los Angeles, which will remain under current ownership.
Advent International has significant investment experience in the retail, consumer and leisure industry. Over the past 27 years, the firm has invested more than $9 billion in 71 companies in the sector across 21 countries worldwide. In addition to Sovos Brands, recent North American investments include Noosa Yoghurt, lululemon athletica (NASDAQ: LULU), The Coffee Bean & Tea Leaf, Serta Simmons Bedding, Party City (NYSE: PRTY), Bojangles' (NASDAQ: BOJA) and Five Below (NASDAQ: FIVE).
Morgan Stanley & Co. LLC is serving as exclusive financial advisor and Morrison & Foerster LLP is serving as legal advisor to Rao's Specialty Foods on the transaction. Weil, Gotshal & Manges is serving as legal advisor to Sovos Brands and Advent International.
