Nation & World

Campbell to sell its fresh, international units

A complete sale of the company also is an option

Bloomberg

Campbell Soup’s interim CEO says the board considered the option of a complete sale during its review and ended the process “with a completely open mind.” Above, a company factory in Toronto.
Bloomberg Campbell Soup’s interim CEO says the board considered the option of a complete sale during its review and ended the process “with a completely open mind.” Above, a company factory in Toronto.

NEW YORK/BOSTON — Campbell Soup said on Thursday it plans to sell its international and fresh refrigerated-foods units — and left open the possibility of putting the whole company up for sale — following a months-long review and pressure from a hedge fund to sell itself outright.

It is not clear if the plan will appease activist investor Dan Loeb, whose Third Point LLC announced a 5.65 percent stake on Aug. 9 and immediately pressed for a sale of the entire company to a competitor as “the only justifiable outcome.”

If dissatisfied, Loeb could escalate his attack into a proxy fight and nominate a slate of directors within the next few weeks to be voted on at Campbell’s annual meeting later this year, sources familiar with the matter told Reuters this week.

Third Point declined to comment on Thursday.

Campbell’s interim CEO Keith McLoughlin said the board considered the option of a complete sale during its review and ended the process “with a completely open mind.”

Selling the two smaller units could make Campbell a more attractive takeover target by turning its focus back to its core soup and salty snacks businesses.

“The board concluded that this current plan right now is the best one to maximize value,” McLoughlin told Reuters in an interview on Thursday.

“Having said that, the board remains open to alternatives that could create more value for the shareholder.”

Billionaire investor Warren Buffett told CNBC his Berkshire Hathaway would not buy the company and said it is “very hard to offer a significant premium for a packaged goods company.”

On a conference call with analysts McLoughlin sidestepped questions about investor pressure for a sale and declined to comment on whether any activists, such as Loeb’s Third Point, would be given board seats.

The 149-year-old iconic company, which revolutionized the home-cooking industry with easy-to-prepare soups and low-cost production techniques, has been struggling to attract young consumers to its namesake soups and Pepperidge Farm cookies.

Camden, N.J.-based Campbell’s latest foray into fresh food has faltered while Wall Street has questioned an acquisition strategy that increased debt while costs are increasing.

Its shares have fallen by a third over the past two years.

The company said on Thursday it would use the proceeds of the unit sales to reduce its debt and also increased its cost savings target by $150 million to $945 million by the end of fiscal 2022.

Retreating from the international and fresh-food businesses marks a reverse from the strategy of former Chief Executive Denise Morrison, who wanted Campbell to have a wide-ranging portfolio with a focus on health and well-being.

Morrison stepped down abruptly in May after a string of poor results. On the same day, the company announced its sweeping review and named McLoughlin as interim CEO.

“Simply put, we lost focus,” said McLoughlin on Thursday. “We aggressively pursued the important consumer megatrend of health and well-being without having clarity on our source of uniqueness ... and we depended too much on M&A, to shape our business strategy,” he said.

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Campbell still is looking for a new permanent CEO. McLoughlin said on Thursday he was not a candidate to take the job.

The two businesses put up for sale currently bring in about $2.1 billion in annual sales — about a quarter of Campbell’s overall revenue.

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