The deal would avert a shareholder vote precipitated by Third Point, the hedge fund that had sought to appoint five new directors to the company’s board. The vote was scheduled for Thursday.
Campbell Soup Co. is on the verge of a truce with an activist hedge fund that had sought to force the sale or restructuring of the nearly 150-year-old food giant, according to two people with knowledge of the talks.
The deal would avert a shareholder vote precipitated by Third Point, the hedge fund that had sought to appoint five new directors to the company’s board. The vote was scheduled for Thursday.
Under the terms of the deal, which is not yet complete, Third Point would appoint two new directors, expanding the board’s membership to 14. Campbell would later appoint a third new director with input from Third Point, and seek the fund’s advice in selecting a new chief executive.
The company, more than 40 percent of which is owned by descendants of the inventor of Campbell’s condensed soup, has struggled with high debt, a decline in earnings and slumping soup sales.
The tentative deal, which was first reported by The Wall Street Journal and was largely proposed in a letter the company sent to shareholders Nov. 9, would also require Third Point to avoid disparaging Campbell or initiating a new proxy fight for about a year.
Most observers had expected the Third Point proposal to fail on Thursday. But, according to one of the people with knowledge of the agreement, the deal is still appealing to Campbell because it allows the company to avoid the distraction of a bitter dispute with a large shareholder while it tries to reverse its fortunes.
Third Point believes its input into the selection of the next chief executive is a critical concession, according to the other person with knowledge of the talks.
Many of the descendants of John T. Dorrance, the condensed soup inventor, have acknowledged the need to restructure the company even as they have chafed at what they see as an assault by Daniel Loeb, who runs Third Point.
Under a turnaround plan the company announced in August, Campbell would sell off international assets, like Arnott’s Biscuits, and retreat from other businesses, like refrigerated soup. It would use the proceeds to pay down debt and focus on canned soup and well-known North American brands like Goldfish and Prego.
Loeb has nonetheless painted the family members as insufficiently willing to shake up the company.
“We’re interlopers who’ve come in, and they’ve decided to stick with the status quo,” Loeb said in an interview with The New York Times this month.
One family member, George Strawbridge Jr., a former Campbell board member, had agreed with Loeb’s critique and aligned himself with the hedge fund.
“My cousins were complacent and ignored the truth,” Strawbridge told The Times. “It’s very much a shame. The company has run into very hard times and has been undermanaged and undersupervised.”
This article originally appeared in The New York Times.from pulse.ng - Nigeria's entertainment & lifestyle platform online
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