Campbell Soup selling Bolthouse Farms, international business

Campbell Soup Co., bucking pressure from a prominent activist investor to seek a buyer, has opted instead to sell operations that accounted for nearly a quarter of its $8.7 billion in revenue for the year ended in July, the Camden company said Thursday.

The businesses targeted for sale include Bolthouse Farms and other refrigerated food units that were supposed to allow Campbell, bogged down for decades by its declining, immensely profitable soup brands, access to faster-growing markets more in tune with consumer trends. Also up for sale are an Australian snack food firm and a Danish cookie maker.

Unloading those operations will leave Campbell with U.S. businesses split between faster-growing snacks, from recently acquired Snyder's-Lance Inc. coupled with Pepperidge Farm cookies and crackers, and a set of slower-growing or declining brands, such as canned soup and V8 juices, that still generate significant profits.

Campbell's interim president and CEO, Keith McLoughlin, who has been on Campbell's board since 2016, told analysts on a conference call that the company's board had considered a full range of options as part of a strategic review underway since May, including splitting the company and selling outright.

"The board concluded that, at this time, the best path forward to drive shareholder value is to focus the company on two core businesses in the North American market with a proven consumer packaged goods business model. Importantly, the board remains open and committed to evaluating all strategic options to enhance value in the future," he said.

Campbell's shares closed at $39.15, down 84 cents, or 2 percent, on the New York Stock Exchange. The shares have recovered from a recent low of $32.63 in June, following the abrupt retirement of CEO Denise Morrison.

Proceeds from the sales will be used to repay some of the company's $9.7 billion in long-term debt, which is up from $3.5 billion a year ago. Campbell did not establish a timeline for the sales or estimate how much it expected to receive for the businesses.

"The results from the strategic review are underwhelming," said Christopher R. Growe, an analyst with Stifel who has a $35 price target on the shares and expects continued "tough sledding."

The changes announced Thursday came as the entire packaged foods industry struggles to capture revenue growth.

Campbell's moves undo many of Morrison's efforts to rejuvenate the 149-year-old company by parlaying profits from Campbell's declining canned soup business into faster-growing but less profitable products.

Her first big move was the $1.55 billion purchase in 2012 of Bolthouse Farms, which sells fresh carrots, juices, salad dressings, and other plant-based beverages. Bolthouse proved to be nothing but trouble, as planting and harvesting carrots failed to go smoothly season after season and factory woes slowed beverage production.

Campbell wrote off as worthless much of what it paid for Bolthouse.

Dumping Morrison's fresh-food division fits with a pattern of starts and stops over decades, including a push into fresh foods in the 1980s, efforts to compete with dried soup, and a bid to establish a soup business in Russia.

Morrison did not get a chance to redeem herself on this year's $6.1 billion purchase of Snyder's-Lance Inc., a move designed to allow Campbell to participate more fully in the Big Food stampede into snacks. Forced to report yet another in a long string of bad quarterly earnings, she was gone less than two months after the deal was completed in late March.

McLoughlin stepped in as CEO in May and pledged a top-to-bottom review of Campbell's businesses, with nothing off the table.

Daniel S. Loeb, a prominent activist investor at Third Point LLC, took the turmoil as an opportunity to accumulate a 5.65 percent stake in Campbell for $688 million, while calling for the sale of the company.

Third Point had no comment on the results of Campbell's strategic review.

In a dramatic twist, Loeb won the support of George Strawbridge Jr., a cousin of Campbell's brother-and-sister board members Mary Alice Malone and Bennett Dorrance, who own a combined 33.1 percent of the company's shares.

Campbell's bylaws require a sale to be approved by two-thirds of votes cast, making it almost impossible to sell the company without the approval of Malone and Dorrance. Changing the company's charter also requires a two-thirds vote.

The decision by the Campbell board to sell just part of the company could set the stage for a proxy fight this fall, if Loeb and Strawbridge nominate their own panel of directors. Even if Malone and Dorrance were voted off the board, they would still retain the right to vote their shares.

During the conference call, McLoughlin declined to discuss whether the company would accept additions to the board from Loeb. “It’s not appropriate for us to comment on speculation of what might or might not happen, what shareholders will do or won’t do,” he said.