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Third Point Aims to Replace Campbell Soup’s Entire Board

Cara Lombardo

Daniel Loeb’s Third Point LLC plans to launch a proxy fight to replace Campbell Soup Co.’s entire board after the fund was underwhelmed by the company’s plan to sell two business units, said people familiar with the matter.

If it were to succeed in ousting the board, the activist hedge fund believes all potential options for the company could be back on the table. Third Point’s prior stance was that a sale of the whole company was “the only justifiable outcome” for Campbell under its current board and management. It is rare for activist investors to attempt a wholesale flip of a company’s board—and even rarer that they succeed in doing so.

But Third Point is seeking every seat and thinks Campbell’s current board, which includes three descendants of the inventor of Campbell soup, isn’t acting fast enough to turn around the struggling food conglomerate and undo some of the strategic missteps it oversaw, the people said. Third Point has allied itself with George Strawbridge Jr., another descendant and previous board member who owns a 2.77% stake in the company.

Third Point could announce its slate, which includes Mr. Strawbridge, Third Point employees and former consumer-products executives, among others, as soon as this week, the people said. The deadline to nominate directors to be voted on at the company’s annual meeting is Sept. 16.

In a written statement, Campbell said its recent strategic review determined its best path forward was “to optimize its current portfolio, divest certain businesses and pay down debt, while also working to reduce costs.” It said it is open to evaluating all options to improve shareholder value.

A battle with Campbell would be Third Point’s first proxy fight in several years and its first attempt at ousting a full board. Activists rarely succeed at replacing entire boards, and proxy fights sometimes end in settlements doling the activist fewer seats than originally sought. But it has happened, including at Darden Restaurants Inc. in 2014 and at small retailer Destination Maternity Corp. earlier this year. Activists traditionally have also steered clear of heavily family-owned companies like Campbell, but even a partial victory in this case could change that, activist defense advisers have said.

Mr. Loeb’s hedge fund faces challenging numbers in a shareholder vote: Family members of Campbell inventor John T. Dorrance control more than 40% of the company’s shares, according to FactSet. Some could be unlikely to support Mr. Loeb, especially after he called for an outright sale.

Third Point and Mr. Strawbridge, a grandson of Mr. Dorrance, together own about an 8.4% stake in the company. They believe they are unlikely to sway family members Mary Alice Malone and Bennett Dorrance, who are both members of the board, but that other family members might be more open to change, the people said. Campbell has previously said all board members were open to all options during a recent strategic review. Ms. Malone and Mr. Dorrance didn’t immediately respond to requests for comment.

The dissidents’ nominees are expected to include Third Point partner Munib Islam and managing director Matthew Cohen; former Uber Technologies Inc. executive Bozoma Saint John; Michael Silverstein, a Carlyle Group operating executive; and four people with previous ties to Campbell including Mr. Strawbridge and William Toler, the former chief executive of Hostess Brands Inc., the people said. Mr. Strawbridge was a Campbell director from 1988 to 2009.

Campbell is at a crossroads in its 150-year history, as consumers have turned away from its namesake canned soups and the company’s pivot to fresher foods hasn’t panned out. Last week, it announced plans to sell its international business and a fresh-food unit and refocus on its North American snack, meal and drink businesses. The decision to sell the units, which comprise roughly one-fifth of the company’s revenue, came after the company examined a range of options including a full sale. It said last week it hasn’t ruled out an eventual full sale.

Shares of Campbell, which has a market value of roughly $12 billion, have slumped 17% so far this year.

Third Point, which has about $18 billion of assets under management, often invests in what it considers undervalued companies on the verge of change. The last time it waged a proxy fight was at Sotheby’s in 2013. In that case, the two sides settled a day before the shareholder vote, giving Third Point three seats on the auction house’s board.

Annie Gasparro contributed to this article.

Write to Cara Lombardo at cara.lombardo@wsj.com



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