The activist investor trying to upend Campbell is going after the company's iconic soups: They're boring. They've got weird ingredients. And they cost too much. Campbell's is firing back.
Daniel Loeb's hedge fund Third Point LLC laid out the criticism in a new 100-day plan to refresh the company, the latest move in a heated battle between Third Point and Campbell's leadership over the future of the 149-year-old company.
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"All of Campbell's stakeholders deserve a new vision and a blueprint for restoring the Company to growth and profitability," Third Point said in a statement on Tuesday.
Campbell's was blunt in its retort.
"Third Point's campaign to seize control of the Board can be summed up as follows, 'Vote for us and we'll think of something,'" the company said in a statement to CNN Business on Tuesday.
Campbell added that to come up with their own plan for the company, Third Point "simply and effectively copied and pasted the actual plan outlined by Campbell" over the summer.
"Beyond what they have copied from our plan, Third Point's presentation is riddled with inaccuracies, half-truths, simple generalizations, and vague recommendations," Campbell said. Third Point's response was equally harsh.
"Campbell's hastily-issued response to our plan released today insults the intelligence of its shareholders," the hedge fund said. "Our 100 Day blueprint in no way endorses their 'plan', which was simply a limp promise to 'do better'."
Third Point wants to replace the entire Campbell's board. If it is successful, it plans to replace interim CEO Keith McLoughlin with a permanent CEO, a source familiar with Third Point's strategy said. The hedge fund also plans to review the current portfolio and improve traditional Campbell's soups.
Campbell's core products "seem tired and out-of-date," Third Point said, adding that the company has failed to innovate flavors for its classic products, and still uses "hard-to-pronounce and obscure sounding ingredients" like hydrolyzed soy protein and glutamate in those products. Meanwhile, many food companies are phasing out artificial ingredients in response to consumers clamoring for healthier foods.
Plus, Campbell is charging too much for the same old soups while losing market share, Third Point said.
Third Point noted that Campbell (CPB) has some exciting products, including it's Slow Kettle, On The Go and Well Yes! soup brands. But those make up a very small part of the company's business, Third Point noted.
The hedge fund also wants to focus on Campbell's snacks, acquire small, healthy brands and modernize Campbell's V8 brand.
The hedge fund's plan is "not a duplicate" of Campbell's, said Michael Silverstein, a Third Point nominee for the new board and former executive at The Carlyle Group.
"They don't talk at all about Campbell's soup," he said.
Other soup brands, like Progresso, are much heartier, he said. "Families want chicken noodle soup with lots of chicken."
"The Campbell soup business is what determines the value of the Campbell Soup company," he added.
Campbell tried to capitalize on the health trend with Bolthouse Farms juices and refrigerated soups. But that bet failed, and the company said in August that it was selling Campbell Fresh, which includes those products.
Third Point and Campbell Soup have been locked in a proxy fight for several months. In September, Loeb suggested replacing the entire board, accusing members of "mismanagement, waste, ill-conceived strategy, and inept execution." Last week, Third Point sued Campbell, alleging that board members are misleading shareholders. Campbell said it is "vigorously contesting" the lawsuit.
Loeb has said that a full sale of the company is the best option for Campbell. But with a new board in place, Third Point won't necessarily pursue a sale, the source said.
Unless both sides reach an agreement in the coming weeks, the proxy battle will come a head at Campbell's annual shareholder meeting, scheduled for November 29. Third Point is trying to sway shareholders to its side — but that will prove a tough task. Descendants of the company's founder hold about 41% of the company, according to data from Refinitiv, and they have sided with the current board. Loeb and his backer George Strawbridge, Jr. hold just 10% of Campbell's shares.
Campbell claims that the new board members recommended by Third Point don't have the right experience for the job, that the hedge fund has a superficial understanding of the company and that the current board knows what's best for Campbell. The company reiterated these points and its confidence in its own plan to move forward in a letter to shareholders on Thursday.
"We are confident in the new strategic direction," wrote Independent Chairman, Les C. Vinney, "and strongly believe that our plan to improve the focus and financial performance of the company is the best path forward."