The simmering discontent among Campbell Soup’s (CPB) shareholders, over weakening profitability and mounting costs, aggravated after the company came up with disappointing results for the June quarter. The remedy prescribed by the management – sale of the Fresh Foods and International units – in a desperate attempt to pacify stakeholders, was not received well.
The bleak investor sentiment, currently at the lowest level since the euphoria triggered by a rumored buyout by Kraft Heinz (KHC), continues to take a toll on the company’s stock price. Things took a turn for the worse this week after activist investor Dan Loeb, whose hedge firm Third Point holds a minority stake in Campbell Soup, renewed his aggressive lobbying for a change of course.
This time, Loeb, along with other shareholders, is seeking to have the entire board of Campbell Soup changed, giving a twist to his earlier demand to sell the company. According to a report published by the Wall Street Journal, the investors led by the hedge fund believe a new board would explore all possibilities to salvage the company and regain its lost ground.
Dan Loeb, whose firm Third Point holds a minority stake in Campbell, has renewed his aggressive lobbying for a change of course
Next week will be crucial for the company’s board as the shareholder group could present its slate of directors any time now. It is speculated that four of the nominees would be former Campbell executives while two will be from Third Point.
While both sides agree that the way out is to get rid of Campbell’s non-core businesses and focus more on packaged foods, they differ on the means to reach that goal. The push for a new board will put pressure on members of the Dorrance family who currently serve on the board. The three members, who inherited the business from their father, hold more than a one-third stake in Campbell Soup.
Earlier, the board had opposed a call to sell the company, which is currently being headed by interim CEO Keith who took the reins after Denise Morrison stepped down from the top post abruptly in May.
Campbell Soup shares fell more than 12% in May after the third quarter results, marking the biggest intra-day loss in recent times. The stock dropped about 15% over the last twelve months and closed Friday’s session slightly higher.
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