Campbell Soup Co. will add two new board members to prevent a proxy fight with an activist investor as the iconic U.S. firm pursues a broader overhaul amid sluggish sales, the company announced on Monday.
As part of the agreement with investor Daniel Loeb’s Third Point LLC, Comscore President Sarah Hofstetter and Kurt Schmidt, Blue Buffalo Company’s chief executive officer, will be added to Campbell’s board, increasing the number of seats from 12 to 14. Third Point will also have greater influence in the selection of a new chief executive expected to be chosen by the end of 2018.
“We will continue to maintain an active and productive dialogue with all of our shareholders, including Third Point, as we executive our strategic plan and build a stronger and more focused company,” interim Chief Executive Officer Keith McLoughlin said in a statement.
The deal comes months after Commerce Secretary Wilbur Ross used a can of Campbell’s soup to push back against critics of President Trump’s double-digit tariffs on steel and aluminum tariffs. The Camden, N.J.-based company, which uses steel in its soup cans, later said the levies would increase costs for consumers and weigh on earnings.
After announcing in August that it was conducting a strategic review of its business after soup sales fell 14 percent, Campbell said in October it would sell non-core businesses to pay down debt and reduce costs. Loeb’s Third Point previously pushed to replace the entire board and sell the entire company. The firm has since dropped its demands to sell the business, according to the Journal.
Experts at Sanford C. Bernstein & Co earlier this month said “it could prove challenging” to improve earnings at Campbell and noted there is “limited upside in selling the company.”
“We don’t find there to be plausible buyers for Campbell’s soup business,” analyst Alexia Howard wrote.
Despite a further decline in soup sales in the three months through October, Campbell’s overall revenue grew 25 percent to $2.7 billion. The company expects a cost-reduction plan to to save $945 million by 2022.
Campbell’s stock fell 1.16 percent to $40.05 per share in New York trading.
