November 5, 2018 / 8:25 PM / 10 days ago

Third Point says buybacks allowed Campbell heirs to build power

CHICAGO (Reuters) - Daniel Loeb’s Third Point LLC criticized Campbell Soup Co’s (CPB.N) board on Monday for allowing the grandchildren of the company’s former chairman to quietly build voting power through the soup maker’s share buybacks in recent decades.

FILE PHOTO: Cans of Campbell's Soup are displayed in a supermarket in New York City, U.S. February 15, 2017. REUTERS/Brendan McDermid/File Photo

Third Point, which owns 7 percent of Campbell’s stock, has been campaigning to oust its entire board at a shareholder’s meeting on Nov. 29, alleging that the company has been mismanaged for years.

Mary Alice Malone and Bennett Dorrance, two Campbell heirs who sit on the company’s board and own about a third of its stock, have pledged to vote against Third Point along with several other Dorrance family shareholders.

Share buybacks have given Malone and Dorrance “almost total control” of the company, Third Point said in a letter to shareholders. Other investors could effectively have no say in the company’s most important transactions because Campbell’s charter requires two-thirds of shareholder votes to approve major deals, the hedge fund said.

“The collective Dorrance family ownership — including a variety of family members not mentioned by Third Point — has continuously been above the 33 percent threshold and has been publicly disclosed for years,” Campbell said in a statement.

The company, which has repurchased about $11.2 billion of shares in the past 28 fiscal years, said the buybacks reflect a commitment to returning capital to shareholders and maximizing their long-term value.

Third Point said Campbell’s buybacks since 1988 have shrunk its outstanding stock, helping Dorrance and Malone grow their percentage ownership of Campbell from about a fifth of shares in 1996. Filings show that the siblings have sold some Campbell stock since then.

Campbell and Third Point have been embroiled in a contentious proxy fight since early September. The soup and snack maker has said Third Point’s proposed board is not qualified to oversee Campbell and that the hedge fund has failed to present new ideas to improve the company.

Third Point sued Campbell late last month, alleging its board misled investors about the competence of its directors and the way it carried out a recently completed strategic review. On Friday, Third Point’s motion for expedited discovery was denied.

The maker of Prego pasta sauces and Goldfish crackers has been hurt by tumbling sales and a higher debt burden from the Snyder’s-Lance deal. Its former chief executive, Denise Morrison, left abruptly in May and has been replaced by board member Keith McLoughlin on an interim basis.

Reporting by Richa Naidu; Editing by Lisa Shumaker

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