Campbell Soup: Third Point Management, Dan Loeb plan for turnaround

Dan LoebReuters/ Steve Marcus

• Third Point Management, the hedge fund owned by the billionaire Dan Loeb, on Thursday laid out its plan to turn around Campbell Soup. 
• The soup maker has suffered through years of declining soup sales.
• Third Point says the company’s entire board should be replaced.

Campbell Soup is rallying Thursday, up almost 2%, after Third Point, the hedge fund owned by the billionaire Dan Loeb, called on shareholders to replace the company’s board of directors. 

“One of America’s most iconic brands is being left behind by failed leaders who punished shareholders’ loyalty,” the hedge fund, which has an 8% stake in Campbell, declared in a video released Thursday.

“One dollar invested $20 years ago in the S&P 500 would be worth $4.06 today. $1 invested 20 years ago in the S&P 500 consumer staples index would be worth $4.37 today. But, $1 invested 20 years ago in Campbell would be only worth $1.19.”

Campbell’s shares had a rocky tenure under the leadership of the former CEO Denise Morrison, who retired in May. Morrison took leadership of the soup giant on August 1, 2011, and over the next five years shares soared by more than 100%. But after peaking in July 2016, they had lost 40% of their value before Morrison stepped aside in May as the company’s main business, soup, struggled through years of disappointing sales.

“This was a disappointing quarter, driven by continued challenges in U.S. soup and Campbell Fresh,” Morrison said in the company’s second-quarter earnings release.

“The decline in organic sales was largely due to the performance of Americas Simple Meals and Beverages, where U.S. soup sales decreased by 7 percent based on the key customer issue we discussed last quarter.”

Third Point’s solution: get rid of the entire board who it says didn’t have a succession plan at a critical time for the company.

“Change the board,” the hedge fund said. “Not a member or two. All of the people who in our view are responsible for this incredible destruction and who have put the interest of corporate insiders and wealthy heirs ahead of shareholders and employees for too long.”

Campbell Soup isn’t the only company Loeb is putting pressure on this year. In July, he called for the food group Nestle to divide into three units, spin-off non-core businesses, and appoint an outsider with food and beverage expertise to its board. Previously, he has led turnarounds at Dow DuPont, Yahoo, and Sotheby’s.

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