Campbell Soup (CPB 40.73, +0.20) moved higher by 0.5% in
pre-market amid reports that the company is close to reaching an agreement with
activist Daniel Loeb. Shares of Campbell have lost more than third of their
value since peaking in mid-2016 as the company has struggled to keep pace with
changing consumer tastes.
The Wall Street Journal reported that the food company is likely to add two board members nominated by Mr. Loeb's Third Point Capital Partners. Mr. Loeb's firm had sought to replace the entire Campbell's Board of Directors, but that campaign was blocked by members of the Campbell family.
Campbell Soup released its first quarter earnings report last week, which quoted Interim President and CEO Keith McLoughlin as saying that the company's management has been encouraged by progress made towards the company's goal of simplifying, focusing, and optimizing its product portfolio. The company is working to emphasize its Snacks and Meals/Beverages businesses in its core North American market. Hoping to see these and other efforts to increase operating disciplines continue to yield improve trends, the company noted that it sees fiscal 2019 as a transition year, during which initiatives for improving future performance will be implemented.
In terms of guidance, the company expects that earnings for fiscal 2019 will be between $2.45 per share and $2.53 per share while revenue is expected between $9.98 bln and $10.10 bln. Both guidance ranges are ahead of market expectations.
The Wall Street Journal notes that the proposed deal between Campbell and Third Point is similar to an offer that was refused by Third Point a few weeks ago, and that the deal could still fall apart ahead of a shareholder vote scheduled for Thursday. The addition of Third Point nominees to the Board would reduce the likelihood of a public battle between the company and the well-known activist investor, but it will be Campbell's fiscal performance that will decide whether Third Point will keep the pressure on the company going forward.
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