Campbell Soup Co. agreed to buy Sovos Brands Inc. in a deal valued at $2.7 billion, expanding the soupmaker’s presence in frozen meals and giving it a foothold in the pasta sauce market.

The acquisition of Sovos, best known for the Rao’s pasta sauce brand, extends Campbell’s presence in key food categories. Rao’s accounted for 69% of adjusted net sales last year for Sovos, which went public in 2021. The transaction is expected to close by the end of December.

It’s Campbell’s biggest deal since 2017 when it acquired snackmaker Snyder’s Lance for about $6 billion, according to data compiled by Bloomberg.

After stocking up during the pandemic, Americans have pulled back spending on packaged food over the past year. Rising prices have helped companies maintain sales growth, but that formula is showing signs of weakening as shoppers increasingly hunt for bargains.

Campbell will pay $23 a share, according to a statement Monday, representing a premium of about 28% over Sovos’ Aug. 4 closing price. The acquisition is expected to support Campbell’s long-term financial growth plan with annual cost savings of about $50 million over the next two years.

The sale punctuates Sovos’ rapid growth over the past two years. The company, which also makes Noosa yogurt, was valued at about $1.3 billion following its trading debut in September 2021.

Campbell Soup shares fell 1.7% in early trading at 7:41 a.m. New York time.

--With assistance from Matt Townsend and Liana Baker.

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