Third Point’s Loeb Pushes to Oust Entire Campbell Soup Board

(Bloomberg) -- Dan Loeb is seeking to replace the entire Campbell Soup Co. board after asset sale plans announced last week fell short of his demands for a sale of the whole company.

Loeb is nominating 12 directors to the soup maker’s board, including investor George Strawbridge, who has partnered with the activist’s New York hedge fund Third Point to push for changes at Campbell. In a sharply-worded letter to Campbell’s chairman viewed by Bloomberg on Thursday, Loeb noted that the company’s shares are trading about 20 percent below their price 20 years ago.

“The stock performance is a report card on this board’s tenure of mismanagement, waste, ill-conceived strategy, and inept execution,” Loeb said in the letter obtained by Bloomberg. The letter was released publicly on Friday.

Third Point and Strawbridge collectively hold an 8.4 percent stake in Campbell. They face a potential obstacle due to a block of shares held by the company’s founding family. The descendants of John Dorrance, who’s credited with inventing condensed soup, own about 41 percent of the company and would likely be able to block a takeover or any push for board representation by Loeb.

Campbell said last week that it planned to sell its international and fresh-food businesses after a three-month strategic review. It said it would use the proceeds to pay down debt and focus its operations.

New Direction

Campbell, based in Camden, New Jersey, confirmed Friday morning that it had received the letter. It will review the nominees proposed by Third Point and present the board’s recommended slate of directors in proxy materials ahead of its annual meeting.

“As part of the review process, the board, together with outside advisers, considered a full slate of strategic options and determined that the best path forward to maximize shareholder value, at this time, is to optimize the company’s portfolio, divest certain businesses and pay down debt, and further reduce costs,” Campbell’s interim chief, Keith McLoughlin, wrote in a statement. “The board remains open and committed to evaluating all strategic options to enhance value in the future.”

The date of this year’s annual meeting hasn’t yet been announced. The last one was in November.

Loeb said the company’s strategic plan to sell some assets fell short of what was required and a new board of directors would be needed to right the ship.

“Third Point previously stated that a sale of the company was the only justifiable outcome of a strategic review, which we believed was the case with the current board and leadership team in place,” he said in the letter. “The shareholder slate, once elected, will act consistently with its fiduciary duties in pursuing optimal outcomes for shareholders and managing the company to enhance long-term value.”

Campbell has faced declining sales as consumers look for less-processed products, turning away from its namesake soup. A push to add healthier brands to its portfolio had been hampered by operational issues. The company’s management team, which is searching for a permanent chief executive officer, faces pressure to prove it can ignite growth.

Who’s Who

Third Point’s nominees include former Hostess Brands Inc. Chief Executive Officer William Toler and former Blue Buffalo Co. CEO Kurt Schmidt, as well as Matthew Cohen and Munib Islam from Third Point, according to Loeb’s letter. The other nominees are lawyer Franci Blassberg, 360i LLC Chairwoman Sarah Hofstetter, Bozoma Saint John, Larry Karlson, Raymond Silcock, David Silverman and Michael Silverstein.

Loeb said he was putting forth the slate of directors after the “disappointing outcome” of its strategic review. He said it was further evidence the board was “unable or unwilling” to take to take the bold actions needed to address its “current crisis.”

“We can only conclude that the board remains beholden to the sentimental agenda of its vocal and empowered minority -- the two longstanding family representatives to the board who have stubbornly opposed options to create maximum value for all shareholders for decades,” Loeb said. “At this point, it would be simply reckless to leave the board that caused this mess in charge of fixing it.”

To contact the reporters on this story: Scott Deveau in New York at sdeveau2@bloomberg.net;Craig Giammona in New York at cgiammona@bloomberg.net

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Michael Hytha, Amy Thomson

©2018 Bloomberg L.P.