Dan Loeb disclosed a substantial position in soup and pre-packed foods giant Campbell Soup Co. (NYSE:CPB) and is pushing for the company’s sale.
According to a recent SEC filing, the activist investor’s Third Point LLC acquired a 5.65 percent interest in Campbell for $686.4 million. Leob intends to form a group with George Strawbridge, another shareholder and a family member of the company’s founder, to call for a sale.
Third Point said it purchased the stake after Campbell Soup reported a dismal third quarter and due to the unexpected resignation of the company’s CEO Denise Morrison in May.
For the three months that ended April 30, Campbell Soup showed a loss of $1.31 per share from a profit of 58 cents a year earlier, saying internal and external challenges were factors. The company also lowered its guidance for the full fiscal year following the loss.
Campbell Soup announced earlier in the year that it kicked off a strategic review process to adapt to an evolving business environment and to advance its growth strategies. This covered exploring all possible options for the company, including a sale.
Third Point, however, believes that the only reasonable outcome of this review is to find a strategic buyer for the company.
The activist investor also said it may take other steps to enhance value, including securing a controlling stake in Campbell or exploring a merger.
Years of “abysmal oversight” by Campbell’s board led to management slip-ups, a miserable operating performance and several “ill-advised” acquisitions that took a toll on the company, Third Point noted, adding that the stock trades at about the same price it did 22 years ago and it that carries a huge debt load.
In the same filing, Third Point said it signed an agreement with Strawbridge to coordinate their investment efforts, adding that both share the same views about pursuing reforms at Campbell. Both shareholders collectively hold an 8.42% stake in the company.
In response to Third Point’s calls, Campbell Soup said it remains dedicated to providing shareholders a value-driving plan, which will be unveiled when the company releases its fourth quarter and full-year results at the end of August.
Campbell has a market cap of more than $12 billion. Analysts on consensus expect the company to report fourth quarter earnings of 25 cents per share.
As of March 31, Campbell’s largest stakeholder is Vanguard Group Inc., holding 19.8 million shares valued at $859.9 million.
BlackRock Inc. is another major shareholder with 14.6 million shares in the company valued at $592.3 million, as of June 30.
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Author does not have investment in stock discussed in this article.