The future of Campbell Soup Company (CPB) has been hanging in the balance for several months now amidst pressure from activist investors – worried about the food company’s dismal financial performance and mounting debt – to restructure the business. Though the call to sell the company gathered momentum after its poor performance in the June quarter, the latest developments indicate the stakeholders are pursuing more moderate options to salvage the struggling soup maker.
New York-based hedge fund Third Point (TPRE), which owns about 7% stake in Campbell, seems to have softened its stance after the latter improved its financial performance in the most recent quarter. According to media reports, the companies have moved closer to a settlement on adding the nominees of Third Point to Campbell’s board.
In what could be the beginning of a major shift in the business strategy of Campbell, which is currently run by a family that owns the majority stake, the two parties reportedly agreed to include two nominees of Third Point in the former’s board. Since the matter is yet to be confirmed, the terms are subject to change until a final settlement is reached, which is likely to coincide with Campbell’s shareholder meeting scheduled to be held Thursday.
According to media reports, the companies have moved closer to a settlement on adding the nominees of Third Point to Campbell’s board
It is learned that Kurt Schmidt, former CEO of Blue Buffalo Co., and Sarah Hofstetter, president of Comscore Inc., are the activist fund’s nominees to be added to the board. The bleak prospects of securing an appropriate buyer for Campbell could be the reason behind Third Point freezing its aggressive proposals, including the sale of the company and replacement of all of its board members.
Maintaining the uptrend that followed last week’s impressive earnings report, Campbell’s shares closed the last trading session up 2.5%. A positive change in the decision-making process at the top level could bring long-term benefits to shareholders, considering the below-average return being delivered by the company currently.
Plagued by mismanagement and financial indiscipline, Campbell badly needs a comprehensive overhaul to get back on track. Ironically, the company which drew criticism for its multi-billion dollar buyout of snack maker Snyder’s-Lance earlier this year is selling its fresh food business after efforts to revive the loss-making segment failed.