Dan Loeb Takes Stake in Campbell, Pushes for Sale of Soup Maker

(Bloomberg) -- Third Point, the activist fund run by Dan Loeb, disclosed a stake in Campbell Soup Co. and said a sale of the company would be the best outcome in its current strategic review after years of “abysmal oversight.”

The New York-based hedge fund said in a regulatory filing it had partnered with fellow Campbell investor George Strawbridge to push for a sale of the soup maker. They collectively hold about 8.4 percent of the company, according to the filing.

Loeb said in the filing that Third Point has had conversations with the company’s interim chief executive officer, Keith McLoughlin. Based on the talks, and subsequent statements from the company, he said he believes a sale is being considered. And given the obstacles the company faces, “the only justifiable outcome of the strategic review is for the issuer to be sold to a strategic buyer,” he said.

In response, Campbell sent a statement reaffirming that its strategic review in order to “maximize shareholder value.” The outcome of the review will be reported along with quarterly results will be released on Aug. 30.

Shares of Campbell rose 0.7 percent on Thursday to $42.28.

Loeb said in the filing that he started to build most of his position after the company’s “disastrous” fiscal third quarter results in May and the unexpected departure of Chief Executive Denise Morrison. After researching the company, he concluded the board of directors have “permitted management missteps, dismal operating performance, and a series of ill-advised acquisitions to take an irreversible toll.”

Same as 1996

He noted Campbell’s shares trade at roughly the same price it did in 1996 and that its debt prevents action to counteract deteriorating operating and financial results.

While Loeb said he was aware of the founding family’s significant Campbell stake, he reminded the board in his statement that their duty was to represent all shareholders. He also noted that Strawbridge is also a descendant of the founding family and chided them for not being prepared to replace Morrison.

In addition to canned soup, which has slumped amid broad changes in consumer tastes, Campbell produces Goldfish crackers and Pepperidge Farm baked goods. The company also bought the salty snack maker Snyder’s-Lance in December for about $4.9 billion.

With retailers like Walmart Inc. pressing suppliers to lower costs and Amazon.com Inc. increasingly pushing into the grocery business, packaged-food makers have struggled to raise prices.

Campbell has been without a permanent chief executive officer since the abrupt departure of Morrison in May. Less than a year after Morrison took over in 2011, Campbell agreed to buy Bolthouse Farms, a maker of fresh juice and salad dressing that also operated a carrot-farming business.

Related: After $110 Billion in M&A, Big Food Gears Up for More

The deal was seen as a way to push the canned soup company into fresher and more natural products, which are on trend with modern consumers. But that merger has been hampered by operational issues and a recall that battered results. Campbell has been mired in a three-year sales slump that dates back to 2015.

©2018 Bloomberg L.P.