There’s a battle brewing over the nation’s most well-known soup brand. Campbell Soup is in the middle of heated battles that stretch across multiple fronts, including public relations, executive posturing, and legal proceedings.
All of this has been initiated by Daniel Loeb, an activist investor who’s hedge fund, Third Point LLC, owns 7% of the company. He filed a lawsuit on Thursday claiming the current board of directors misled investors with their plans for the future and by not putting the entire company up for sale.
That may sound like a huge challenge for the company, but it’s really just posturing. It’s very unlikely Loeb can replace the board. Instead, it’s more likely he can position his campaign to push for a couple of hand-picked additions to the board.
Campbell claims that the new board members recommended by Third Point don’t have the right experience for the job, that the hedge fund has a superficial understanding of the company and that it has failed to present a compelling argument. The company reiterated these points and its confidence in its own plan to move forward in a letter to shareholders on Thursday.
“We are confident in the new strategic direction,” wrote Independent Chairman, Les C. Vinney, “and strongly believe that our plan to improve the focus and financial performance of the company is the best path forward.” He added that he has the support of the family members who sit on the board.
Why won’t it sell? Because nobody will want to pay what it’s worth. Despite poor decisions that have extended the company beyond its means, they are still a giant in the food industry that will demand top dollar. What Loeb has done is tarnish the image and created a volatile situation that will make potential investors or buyers of the various components of the company run away.
Regardless of what happens with the executive posturing, one thing is certain. Americans are always going to love soup. That fact alone should keep the value of the company higher than anyone would be willing to pay.
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