WASHINGTON — Third Point L.L.C., which recently increased its share of the outstanding capital stock of Campbell Soup Co. to 5.65%, said the company should be sold in an Aug. 9 13D filing with the U.S. Securities and Exchange Commission.
Given the obstacles facing Campbell Soup Co., “the only justifiable outcome of the strategic review is for the issuer (Campbell Soup) to be sold to a strategic buyer,” Third Point said in the S.E.C. filing.
Third Point also is working with George Strawbridge Jr., who owns 2.8% of the outstanding capital stock of Campbell Soup Co., to reconstitute Campbell Soup’s board of directors. Mr. Strawbridge made a separate 13D filing with the S.E.C. on Aug. 9.
Campbell Soup Co., Camden, N.J., responded that the company, as previously announced on May 18, is undertaking a board-led strategy and portfolio review to examine all potential paths to maximize shareholder value.
“Our entire board of directors remains dedicated to delivering a go-forward strategy that will drive value for all shareholders,” Campbell Soup said. “As we stated when we announced the review, we look forward to sharing the details of our plans when the company reports its fourth-quarter and full-year results on Aug. 30 and engaging with our shareholders on our strategic plan.”
Campbell Soup Co.’s share price on the New York Stock Exchange closed at $42.28 per share on Aug. 9, which compared with $53.21 per share on Aug. 9, 2017.
Third Point in its S.E.C. filing said Campbell Soup’s stock today trades at roughly the same price it did in 1996 and that the company carries a debt load of more than 5x its EBITDA, which provides limited room to maneuver in the face of deteriorating operational and financial results. Campbell Soup’s board of directors has permitted “management missteps, dismal operating performance and a series of ill-advised acquisitions to take an irreversible toll on (Campbell Soup),” Third Point said.
Third Point said it acquired most of its stock in Campbell Soup after the company on May 18 reported a loss of $393 million in the third quarter and that Denise M. Morrison was retiring as president and chief executive officer. Third Point said that while the founding family (the Dorrance family) of Campbell Soup holds a significant percentage of the voting stock, the board of directors bears fiduciary responsibility to all shareholders.
Credit Suisse on Aug. 3 downplayed a New York Post article addressing the interest of Kraft Heinz Co. in buying Campbell Soup. Credit Suisse described the possible transaction as a “low-probability outcome.”
Mr. Strawbridge of Wilmington, Del., in his Aug. 9 S.E.C. filing cited Campbell’s “deeply flawed strategic plan” and the execution of that plan, which resulted in a reduction in shareholder value. Mr. Strawbridge said for months he repeatedly requested that Campbell’s board of directors act to rectify the situation. The board said it disagreed with Mr. Strawbridge’s potential strategic alternatives and did not believe further dialogue would be productive, according to the S.E.C. filing.
Mr. Strawbridge said the only reasonable approach now is to reconstitute the board.
“Only a reconstituted board, free of the need to defend past actions and other legacy issues, will be able to objectively explore all strategic alternatives, including a sale of the issuer (Campbell Soup Co.) or other business combination, that would substantially increase the value of the issuer’s shares,” he said in the S.E.C. filing.
Mr. Strawbridge said he had agreed to act in concert with Third Point to engage in discussions and activities on the matter. Third Point will take the lead on activities related to pursuing representation on Campbell Soup’s board of directors. Third Point will include three potential people for the board previously suggested by Mr. Strawbridge.