Loeb, Campbell Take Steps to Cool Simmering Proxy Battle

(Bloomberg) -- Dan Loeb’s Third Point and Campbell Soup Co. have taken steps to cool their simmering proxy battle after shareholders in the soup maker urged the parties to reach a settlement.

Campbell Soup said in a letter to shareholders it has meet with Third Point several times in the past few weeks, including Thursday and Friday. The company said it offered to appoint two of Third Point’s board nominees -- Sarah Hofstetter and Kurt Schmidt. The move wasn’t enough to reach an agreement with the activist, it said.

“Third Point rejected this proposal,” the company said in the letter. “Instead, they have decided to continue this wasteful and distracting proxy fight.”

Earlier Friday, Loeb extended an olive branch of his own by reducing the number of director candidates he would put forth to five, after originally seeking to replace the entire 12-member board. The activist fund had said a complete overhaul was needed and that Campbell should explore a sale. Loeb has since backed off from his demand for a sale and has outlined a 100-day plan to turn around the company.

In a letter to the company’s chairman Friday, Third Point said it scaled back the nominations after getting feedback from investors that, while change was needed, a settlement involving “meaningful representation” on the board from Third Point’s slate would be in the best interest of both parties.

Third Point, which holds a 7 percent stake in Campbell, said it will put forth its “short slate” at the company’s annual general meeting slated for Nov. 29.

“We have carefully selected the independent short slate to bring the experience and expertise that we think Campbell’s board most needs to improve outcomes for shareholders,” Third Point said in the letter, adding that it had been surprised by Campbell’s “blanket dismissals” of its nominees.

“We suggest you take the time to do so to see for yourself why many shareholders believe they would be outstanding additions to the Campbell board,” the firm said.

Loeb’s Nominees

Third Point’s nominees include: William Toler, the former chief executive officer of Hostess Brands Inc.; Schmidt, the former CEO of Blue Buffalo Pet Products Inc; Hofstetter, the president of ComScore Inc.; Bozoma Saint John, a branding expert; and Munib Islam, a partner at Third Point. Toler is prepared to serve as interim CEO of Campbell, Third Point said.

Campbell said it felt it was important for shareholders to know that it continued to offer both Hofstetter and Schmidt seats on the board, and that it had dozens of candidates of its own. It said it would only consider directors who were truly open to all strategic alternatives or are free from employment conflicts that would impair that openness or limit the ability to maintain board confidentiality, which it said would exclude Third Point employees.

“The Campbell board will continue to be open to any change that will drive long-term shareholder value, and we welcome input from all of our shareholders with respect to that process,” it said.

Founder’s Descendants

The back and forth comes after Campbell said this month that descendants of the company’s founder planned to vote their entire stake in the company, about 41 percent of its outstanding common shares, for its incumbent directors. That creates a significant hurdle for Loeb to get his directors on the board.

The decision to scale back the slate comes as both sides prepare to present their cases to a group of shareholder advisory firms, which tend to look more favorably on activists seeking a minority amount of seats rather than those who are seeking to replace the entire board.

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