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Campbell Soup to sell international and Fresh units - Metro US

Campbell Soup to sell international and Fresh units

FILE PHOTO: Tins of Campbell's Tomato Soup are seen on a supermarket shelf in Seattle, Washington, U.S. February 10, 2017. REUTERS/Chris Helgren/File Photo
Reuters

(Reuters) – Campbell Soup Co said on Thursday it would sell its international businesses and Fresh refrigerated-foods unit, following a months-long strategic review and pressure from hedge fund investors to sell the whole company.

The two businesses currently bring in about $2.1 billion in annual sales, about a quarter of Campbell’s overall revenue, under brands including Bolthouse Farms, Arnott’s and Kelsen.

It is not clear if the plan will appease activist investor Dan Loeb, whose Third Point LLC hedge fund announced a 5.65 percent stake on Aug. 9 and immediately pressed for a sale of the entire company to a competitor as “the only justifiable outcome.”

Shares of the 149-year-old company were little changed in trading ahead of the bell.

The planned sales mark a change from the strategy of former Chief Executive Denise Morrison, who wanted Campbell to sell a range of healthy foods from “soup to nuts”.

Morrison stepped down abruptly in May after a string of poor results. On the same day, the company announced a sweeping review of its portfolio and board member Keith McLoughlin was named interim CEO.

Campbell’s share price has fallen by a third over the past two years as young consumers turn away from its soups and Pepperidge Farm cookies.

One of America’s best-known companies, which revolutionized the home-cooking industry with easy-to-prepare soups and low-cost production techniques, it is now struggling to keep up with healthier tastes and trying to control costs.

With a market value of about $12 billion, it is the latest household name in U.S. business to receive the attention of activist investors, following Procter & Gamble Co , Xerox Corp and others.

Historically, the company has resisted big changes, being effectively controlled by the heirs of John Dorrance, the chemist who invented condensed soup and went on to run the company a century ago.

Dorrance’s grandchildren Mary Alice Malone, who raises horses in Pennsylvania, and her brother Bennett Dorrance, a real estate developer in Arizona, between them control 33 percent of Campbell’s shares. They have fended off periodic calls over three decades for the company to sell itself.

In the past, the family has been able to rely on supportive, long-term shareholders. But in the past few months – most notably in the second quarter of 2018, when the company announced its wide-ranging review – a number of hedge fund investors have bought positions and are looking for more sweeping measures, including a sale.

Campbell had already moved to rationalize its key businesses. In April, it put its core businesses under new Chief Operating Officer Luca Mignini.

Under Morrison, the company arranged its products into three parts in 2015.

Its simple meals and beverages unit included Campbell soups, Prego sauces and V8 juices; global biscuits and snacks included then-newly acquired Pepperidge Farm and Snyder’s-Lance brands.

It also set up a new business unit, Campbell Fresh, which was meant to tap into consumers’ booming appetite for healthier foods. That business struggled, resulting in a two-year decline in organic sales.

(Reporting by Harry Brumpton and Aishwarya Venugopal; Editing by Bill Rigby and Patrick Graham)

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