Loeb Calls Campbell Attractive Takeover Target, Ratchets Up Pressure
Billionaire investor Daniel Loeb, who is seeking to replace the entire board at Campbell Soup Co, on Monday called the company an "iconic asset" and attractive takeover target that could fetch as much as $58 per share.
The hedge fund manager whose Third Point LP owns roughly 6% of Campbell also urged the company to consider selling non-core brands like Pop Secret and Pepperidge Farm Frozen Cakes, according to a new presentation.
Campbell's Strategic Review
Campbell launched a strategic review after its chief executive Denise Morrison left in May and said in August that it planned to sell its international and fresh refrigerated-foods units. It left open the possibility of putting the whole company up for sale.
Loeb is now stepping up the pressure on Campbell and is taking his case for change directly to investors who will be asked to vote on board members in the coming weeks.
Descendants of John Dorrance, who ran Campbell a decade ago, are split in their loyalties with some serving on Campbell's current board and one siding with Loeb and asking investors to elect him as well as 11 others on Loeb's slate.
On Monday, Campbell again said that its plan is the best path forward. "Management is focused on implementing the plan and setting the foundation for sustainable, profitable growth in fiscal 2020 and beyond," Campbell said in a statement, adding "the Board remains committed to evaluating all strategic options to enhance value in the future."
Losing Market Share
Campbell has been losing market share and management has been distracted with bad deals and missing key trends in the its core soup business, Loeb said.
He also said the company has been without at permanent chief executive at a critical time and blamed the board for having "overseen a series of strategic and operational blunders over many years that have driven extreme underperformance in Campbell shares."
When Loeb first unveiled his ownership stake in August, he called for a sale of the company. He recently appeared to have backed away from that stance, but on Monday he laid out the case for a full sale. He also urged more divestments on top of what the company has already pledged.
In the presentation, Loeb said the company could "attract multiple buyers and could fetch 14-15x EBITDA, implying $52 to $58 per share." That would mark a 58% premium over Friday's closing share price.
"The dismal stock performance is a report card on the Company’s leadership, which has made a series of blunders," Loeb wrote in a letter that was released at the same time as the presentation. "We believe the past year has been particularly disastrous."
One dollar invested in Campbell, 10 years ago is worth $1.34 today, Loeb wrote noting that a dollar invested in rival Hormel! at the same time would now be worth $16.37.