Risk & Compliance

Activist Seeks Records in Campbell Soup Fight

Third Point's Daniel Loeb believes internal company documents could boost his bid to replace Campbell's entire board.
Matthew HellerOctober 4, 2018

Activist investor Daniel Loeb is stepping up his campaign to replace Campbell Soup’s board, demanding in a letter to the ailing company that it provide him with access to internal documents.

According to Reuters, Loeb’s Third Point hedge fund delivered the letter to Campbell Soup on Wednesday, citing a New Jersey law that gives shareholders the right to review company documents, provided they demonstrate a “proper purpose” for looking at the records.

The letter gave Campbell five days to provide Third Point with access to several, typically confidential, documents relating to its recently completed strategic review, its mergers and acquisitions activity, and succession planning for its chief executive.

Third Point, which owns a 5.65% stake in Campbell, has pushed for a sale of the company and last month unveiled a slate of nominees to replace all 12 of its directors.

Campbell shares have fallen 23% since January. “We believe [the board has] made a series of strategic mistakes and operational failures that have destroyed the value of your holdings,” Third Point told shareholders in a Sept. 28 letter.

Reuters said the hedge fund’s demand for records “offers an example of the legal tools shareholder activists are increasingly using to boost their chances of winning proxy contests against corporate boards.”

Third Point faces challenges in wooing key Campbell shareholders, Reuters said, noting that descendants of former Chairman John Dorrance own a combined 42% stake in the company.

In a statement Thursday urging shareholders to back the board, Campbell said it “strongly objects to Third Point’s aggressive and short-sighted tactics.”

Third Point’s demand letter to the company cited recent comments by interim CEO Keith McLoughlin in which he said Campbell had relied too much on acquisitions and lacked a culture of accountability, that led to poor execution.

“These admissions demonstrate that shareholders are entitled to the records of the company’s decision-making processes to investigate this unquestionable mismanagement and further instances of wrongdoing,” Third Point said.

Campbell said on Thursday it will hold its annual shareholder meeting, where investors will vote on the board directors, on Nov. 29.