Activist investor Daniel S, Loeb of Third Point LLC on Friday launched his expected proxy fight over Campbell Soup Co., notifying the Camden food company that he will seek to replace the entire 12-member board of directors.
Normally, Third Point attempts to place a few directors on the boards of companies it targets for restructuring or sale, but that's not enough in Campbell's case, Loeb wrote in a letter to Campbell chairman Les Vinney.
"Unfortunately, this board's persistent failure to discharge its fiduciary duties leaves us no choice but to seek to replace the entire board with our shareholder slate," Loeb wrote.
After years of struggle to gain footing in a fresh foods arm created under former chief executive Denise Morrison, and under pressure from Loeb since Morrison's abrupt retirement in May, Campbell announced last week that it will sell its Campbell Fresh arm, which includes Bolthouse Farms, and international operations.
That wasn't enough for Loeb, whose funds own 5.65 percent of Campbell's shares and who wanted a sale of the company. Allied with Loeb is George Strawbridge Jr., whose two cousins on the Campbell board, Mary Alice Malone and Bennett Dorrance, own a combined 33.1 percent of Campbell shares and who have historically opposed selling the company.
Loeb's letter addressed the role played by Malone and Dorrance, who are siblings.
"The board's recent conduct and aura of complacency makes no sense from a strategic, operational, or financial perspective," he wrote. "We can only conclude that the board remains beholden to the sentimental agenda of its vocal and empowered minority — the two long-standing family representatives to the board, who have stubbornly opposed options to create maximum value for all shareholders for decades. At this point, it would be simply reckless to leave the board that caused this mess in charge of fixing it."
Selling the company requires a two-thirds vote by shareholders, a high hurdle given the large positions held by Malone and Dorrance. Even if they were booted off the board, it would be hard to sell the company without their approval, experts have said. But if Loeb succeeds in ousting the board, the new directors could decide to sell more substantial parts of the 149-year-old company.
In early trading Friday on the New York Stock Exchange, Campbell's shares were up 11 cents, less than 1 percent, to $40.16.
Campbell said it would review Third Point's slate of director nominees, but said it would stick to the plan it outlined on Aug. 30.
"The company is currently focused on implementing that plan and setting the foundation for sustainable, profitable growth in fiscal 2020 and beyond. The board remains open and committed to evaluating all strategic options to enhance value in the future," interim president and CEO Keith McLoughlin said in a news release.