The battle for Campbell Soup is reaching a boiling point
It’s old money vs. a hedge-fund billionaire
Daniel Loeb is happy to play the barbarian at the gate. He’s got the money, about $3.1 billion (U.S.). He’s got the office, a sleek white space that is a quintessential hedge fund aerie, with art by Jean-Michel Basquiat and Andy Warhol. And in taking on the old-money family who owns more than 40 per cent of Campbell Soup Co., he’s found the perfect foil for his new-money ambitions.
Third Point, Loeb’s hedge fund in Manhattan, is pushing for the sale or restructuring of Campbell, a slumping food giant that has called Camden, New Jersey, home for nearly 150 years.
He’s up against the descendants of John T. Dorrance, a chemist who devised the formula for condensed soup at the turn of the last century.
Dozens of family members depend on
the dividends they receive from the company to underwrite their comfortable lives. And for the most part they find Loeb’s proposals anathema.
“We’re interlopers who’ve come in and they’ve decided to stick with the status quo,” Loeb said in an interview.
His hedge fund and the company have spent months exchanging barbed letters. Their battle will culminate on Nov. 29, when Campbell shareholders vote on a proposal by Third Point to take five seats on the company’s board. Loeb has even persuaded one dissident Dorrance heir and a former Campbell board member, George Strawbridge Jr., to join his campaign.
“My cousins were complacent and ignored the truth,” said Strawbridge, who owns nearly 3 per cent of the company. “It’s very much a shame. The company has run into very hard times and has been underman- aged and undersupervised.”
But Loeb, who controls more than 7 per cent of Campbell stock through Third Point, will need to win over many more shareholders to be successful. His board nominees won the endorsement of Institutional Shareholder Services, a proxy advisory firm, on Wednesday. The hedge fund, ISS said, “has presented a compelling case that change at the board level is warranted.”
Campbell is clearly struggling. Earnings were down 50 per cent last quarter, soup sales have been eroding, and the company’s chief executive, Denise Morrison, stepped down under pressure in May.
Multibillion-dollar acquisitions under her watch have done little to lift profits while leaving the company with billions in debt. In the last two years, Campbell’s stock has badly trailed the broader market, as well as other food businesses, and has lost more than a third of its value.