Coverage: Campbell Soup tries to fend off activist investor
Campbell Soup is asking shareholders to stand with the soup maker in a battle over its future as activist investor Third Point turns up pressure on the company to sell.
Lauren Hirsch of CNBC.com had the news:
Dan Loeb’s Third Point, which has a 5.65 percent stake in Campbell, announced its intention to try to replace the entire Campbell board earlier this year. Third Point is unhappy with Campbell’s performance and claimed it didn’t fully evaluate a potential sale as part of the company’s three-month critical review.
The review was sparked by Campbell’s disappointing earnings and surprise departure of CEO Denise Morrison. While Loeb has pushed for Campbell to sell itself as part of the review, Campbell announced in August that it plans to sell its international and fresh food businesses.
Those units have already seen interest from potential acquirers, The Wall Street Journal reported on Thursday.
Loeb is now trying to replace all 12 of Campbell’s board directors at the company’s Nov. 29 shareholder meeting. The company on Thursday reiterated its support for its own band of board nominees.
Svea Herbst-Bayliss of Reuters reported that Third Point is demanding the board’s records:
Third Point’s move offers an example of the legal tools shareholder activists are increasingly using to boost their chances of winning proxy contests against corporate boards.
Such maneuvering could prove crucial in this case, given Third Point, which owns 5.65 percent of the canned soup maker, faces challenges in wooing some key shareholders. Descendants of former Campbell Soup Chairman John Dorrance own a combined 42 percent stake in the company, representing a major hurdle.
Third Point gave the U.S. company five days to provide it access to several, typically confidential, documents, pertaining to its recently completed strategic review, its mergers and acquisitions activity, and succession planning for its chief executive, according to Third Point’s “demand letter,” dated and delivered to Campbell Soup on Wednesday.
In the letter, the hedge fund cites a New Jersey statute that gives shareholders the right to review company documents, provided they demonstrate a “proper purpose” for looking at the records. This sets the stage for a legal battle with Campbell Soup, should it refuse access to the records.
Christopher Doering of Food Dive reported that the Fresh division could be sold to the former Bolthouse Farms CEO:
After a few years diversifying away from its core packaged food business through a string of acquisitions, Campbell Soup appears to be making progress to undo what has proven to be a costly and challenging endeavor.
Since its purchase by Campbell Soup in 2012, Bolthouse Farms — a maker of carrots, smoothies, juices and dressings — has faced weather challenges and a recall. At the same time, refrigerated salsa, hummus and dips producer Garden Fresh, acquired by the company in 2015, has struggled to generate consumer interest beyond its core audience in the Midwest.
“It just kind of became one problem after another,” Brittany Weissman, an analyst at Edward Jones, told Food Dive. “They just didn’t have the knowledge base and the team in place to really understand” the refrigerated distribution system and volatility in the commodity market.
The risk for Campbell Soup is that unloading its fresh operations leaves it further exposed as a packaged food company with its core soup division and snacks operation — a segment that was recently bulked up through the $5 billion purchase of Snyder’s-Lance, adding Pop Secret, Kettle and Emerald to its portfolio.