Feud over the future of Campbell Soup could dismantle the 149-year-old soup company

An increasingly ugly struggle for Campbell Soup control is taking place in courtrooms and conference rooms.

The stakes are high: the result will determine the future of the 149-year-old American company and its iconic brands.

On one side, activist investor Daniel Loeb. On the other hand is the current advice. Both cited the support of members of the company's founding family and said they knew what was best for Campbell Soup (CPB), which faced many problems, including poor sales, an unfortunate acquisition and the sudden departure of its CEO. year.

Loeb wants the current leadership removed, but Campbell's says Loeb is inexperienced in the soup world and knows how to fix it.

The battle has been raging for months. But the situation warmed up when Third Point, LLC, Loeb's hedge fund, sued the soup society Thursday, alleging that Campbell's board members were misleading shareholders. Campbell said that he "vigorously contested" the lawsuit.

It is not unusual for proxy battles to become so intense.

"Proxy fighting is notoriously unpleasant on both sides," said Charles Elson, director of the Center for Corporate Governance at the University of Delaware. He added that the lawsuits are not unusual. "Charges, litigation, everything is happening."

Scathing letter

The fight began in earnest in September, when Loeb suggested replacing the entire Campbell board.

In a scathing letter to the chairman of the board of directors, he blamed the board for his problems and accused members of "mismanagement, waste, poorly designed strategy and poor execution".

Loeb's letter responded to a business plan that did not meet his desire for full sale. In August, the company announced that it was selling Campbell Fresh, which includes Bolthouse Farms juice and Campbell's chilled soups, as well as its international operations. After years of bidding, he said he would instead focus on building his most popular brands and that he had not ruled out a sale.

Since then, both parties have been preparing their arguments in anticipation of the annual shareholders meeting scheduled for November 29.

In the lawsuit Thursday, Third Point claimed that Campbell had misled shareholders by asking them to vote by proxy without giving details of the strategic review. Third Point also questioned a number of member qualifications and judgments

Third Point stated that the defendants were "engaged in a deliberate campaign of misinformation in order to guarantee their reelection through an ill-informed electoral vote". It requires Campbell to correct the alleged inaccuracies prior to the annual meeting.

Campbell states that the new Board members recommended by Third Point do not have the good experience for the position, that the hedge fund has a superficial understanding of the company and that it has not presented a convincing 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 C. Vinney, Independent Chairman of the Board of Directors, and we are confident that our plan to improve the company's focus and financial performance is the best way to to follow. Support from family members on the board.

In this case, the odds are against Third Point. Descendants hold about 41% of the company, according to Refinitv data. "It's a huge number to overcome," Elson said. Third Point holds about 7% and shareholder and descendant George Strawbridge Jr. controls nearly 3% for just under 10%, according to Refinitiv.

The hedge fund may want to reach an agreement before the vote, said Jian Huang, an assistant professor in the finance department of Towson University.

"I do not see that Third Point will win this battle," he said. But "they can probably get two or three seats on the board."

Even a few seats on the board could help, he noted, if Third Point's ultimate goal is to convince board members to put Campbell on sale.