Campbell to sell non-core assets
NEW YORK • 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 per cent 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.
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 149-year-old 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.
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.
Retreating from the international and fresh-food businesses marks a reverse from the strategy of former CEO Denise Morrison, who wanted Campbell to have a wide-ranging portfolio with a focus on health and wellbeing.
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.
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.
Campbell International includes Australian biscuits brand Arnott’s and the Kelsen Group, along with the company’s manufacturing operations in Indonesia and Malaysia and its businesses in Hong Kong and Japan.
Campbell Fresh includes Bolthouse Farms, Garden Fresh Gourmet and the company’s refrigerated soup business.
Historically, the company has resisted big changes, being effectively controlled by the heirs of John Dorrance, the chemist who invented condensed soup and went on to run the company a century ago.
Dorrance’s grandchildren Mary Alice Malone, who raises horses in Pennsylvania, and her brother Bennett Dorrance, a real estate developer in Arizona, between them control 33 per cent of Campbell’s shares. They have fended off periodic calls over three decades for the company to sell itself.