Third Point Targets Campbell Soup Board

The Campbell Soup Co. has had to grapple in recent years with stagnant sales and consumers forgoing the canned soups that have been its mainstay product for generations.

Now it must deal with an activist investor that wants to replace its entire board.

Third Point, the investment firm run by Daniel S. Loeb, nominated 12 candidates for the soup maker’s board on Friday to prod it into a sale. Among them is a scion of Campbell’s controlling family who has criticized the company’s direction.

It was an aggressive move by one of Wall Street’s highest-profile activist hedge funds to force through changes at a company.

Activist investors, who publicly pressure corporations to change their strategies, have gained in power over the past decade and have taken on ever-bigger targets. Even blue-chip names like Procter & Gamble, General Electric and Apple have found themselves in the sights of these hedge funds.

But activists have rarely sought more than a few seats on a target’s board in recent years. And companies have grown more willing to give up a board seat or two to avoid a bruising and costly battle. Unseating every director at a company is a far riskier bet, since other investors may oppose such a radical overhaul.

Indeed, investors have moved to sweep aside a company’s entire board on only a few occasions in recent years. The highest-profile example is Darden Restaurants, the parent company of the Olive Garden chain, where the hedge fund Starboard Value successfully ousted all 12 directors.

Over the two decades that he has run Third Point, Loeb has become one of Wall Street’s best-known activists. He has taken on the likes of Sony, the auction house Sotheby’s and most recently Nestlé. Yet even he has shied away from campaigns to push out the full board, content to seek a handful of director seats.

In a letter to Campbell’s board on Friday, however, Loeb wrote that he had no option but to take the most drastic step possible.

The company to date has not heeded his repeated calls to sell itself. Instead, in a plan unveiled last week, Campbell proposed to sell only its fresh food and international divisions.

Campbell’s plan would essentially unwind its effort to branch out from its historical strength in packaged food, which included the $1.55 billion acquisition of the juice maker Bolthouse Farms, amid a shift in consumer tastes toward fresher fare.

Campbell’s decision did not sit well with Loeb, who has said that the company could fetch a premium from food companies who would pay up for a well-known brand.

“Unfortunately, this board’s persistent failure to discharge its fiduciary duties leaves us no choice but to seek to replace the entire board with our shareholder slate,” the hedge fund manager wrote in the letter Friday.

He added that Campbell’s decision to sell off only some of its divisions “provides further evidence that this board is unable or unwilling to take the bold action needed to address the current crisis and does not understand the depth of the company’s problems.”

In its response to Loeb’s move, Campbell reiterated that it had considered all options before moving forward with its plan. The company added that it will review Third Point’s nominees.

The 12 director candidates that Loeb has put up include William D. Toler, the former chief executive of Hostess; Kurt T. Schmidt, the onetime chief executive of the pet food company Blue Buffalo; and Bozoma Saint John, a former Apple executive who is currently the chief marketing officer of the talent agency Endeavor. There are also two Third Point executives among the nominees.

One notable candidate is George Strawbridge Jr., a descendant of John T. Dorrance, who invented condensed soup and ran the company a century ago. Strawbridge, who previously served as a Campbell director, has teamed up with Third Point in urging the soup maker to sell itself altogether.

Whether his relatives — who as a group own about 41 percent of Campbell — will agree is another matter, and winning them over will be a key task for Third Point and Strawbridge.

Other investors in the company appeared mixed about the prospects for the proxy fight’s success. Shares in Campbell were up only slightly in trading on Friday, at $40.22.