Activist investor Third Point LLC disclosed a 5.65% stake in Campbell Soup Co. and said a sale of the company would be the only "justifiable outcome" in its current strategic review.
Third Point, the hedge fund founded by Daniel Loeb, acquired the stake for $686.4 million. In a filing, Third Point said it bought most of the stock of the company after Campbell's "disastrous" fiscal third-quarter results and the unexpected departure of former CEO Denise Morrison.
The hedge fund said its analysis shows that "years of abysmal oversight" by Campbell's board led to management missteps, dismal operating performance and a number of ill-advised acquisitions.
Third Point noted that based on its conversations with interim CEO Keith McLoughlin and the company's public statements it understands that the company is considering all options, including a sale, as part of its strategic review. According to the hedge fund, the company's stock trades at roughly the same price it did in 1996 and it carries a debt load of more than 5x its EBITDA.
The only justifiable outcome of the strategic review is for the company to be sold to a strategic buyer, Third Point said.
The hedge fund may also take other steps to increase shareholder value as well as pursue other plans excluding acquiring a controlling stake in the company, engaging in a merger with it or seeking to exert negative control over the important corporate actions of the company.
Third Point also said it may seek board representation if it concludes that the company's board failed to discharge its fiduciary duty.
The activist investor said it signed an agreement Aug. 9 with shareholder George Strawbridge, a family member of Campbell's founder, to coordinate certain efforts regarding Third Point's investment in the company.
Third Point said Strawbridge strongly shares the hedge fund's views regarding the company, adding that both the parties have agreed to act together to pursue change in the company. Third Point and Strawbridge together own an 8.42% stake in the company.
In June, the New York Post reported that The Kraft Heinz Co. and General Mills Inc. will likely put in a bid to snap up Campbell in the event of a sale.
Campbell started a strategic review earlier this year.