Campbell Soup Co. said Thursday it will pursue the sale of its international and fresh-refrigerated foods divisions, and will continue to remain open to all options, including an outright sale of the company.
Goldman Sachs and Centerview Partners have been engaged by Campbell to begin the process of divesting its Campbell International and Campbell Fresh businesses.
Campbell International consists of Arnott’s and the Kelsen Group, along with the company’s manufacturing operations in Indonesia and Malaysia and its businesses in Hong Kong and Japan.
Campbell Fresh includes Bolthouse Farms, Garden Fresh Gourmet and the company’s refrigerated soup business.
Fiscal 2018 net sales of these businesses, according to the company, totaled approximately $2.1 billion. Proceeds from the divestitures will be used to significantly reduce debt.
Campbell stock was trading at $39.56 a share at 10:40 a.m. ET, down 1.05 percent from Wednesday’s closing.
For the near-term, Campbell said it intends to focus on the growth of its Snacks and Meals and Beverages portfolios in North America.
As a result of the refocusing of its portfolio, Campbell is increasing its cost-savings target by $150 million for a total of $945 million by the end of fiscal 2022.
“Simply put, we lost focus,” Interim CEO Keith McLoughlin said in a conference call Thursday morning. “We lost focus strategically. We had too many initiatives that made the company unnecessarily complex. We were in the food business and the [agriculture] business; we had growth businesses and we had cash businesses; we were focused on startup businesses and venture capital investing.
“We aggressively pursued the important consumer megatrend of health and well-being, without having clarity on our source of uniqueness or whether we brought a competitive advantage to the space. And, we depended too much on mergers and acquisitions to shape our business strategy.”
During its strategic review process, Campbell’s board of directors considered multiple avenues of business optimization, including divesting businesses, splitting the company in two and pursuing a sale. The board determined the best path forward for investors and shareholder value is to focus on Snacks and Meals and Beverages.
“Importantly, the Board remains open and committed to evaluating all strategic options to enhance value in the future,” McLoughlin said.
Still, although McLoughlin said that the company is open to evaluating all strategic options, including an outright sale of the company, he emphasized Thursday’s actions are not an indication of a higher likelihood of future sale.
“We’re a public company. We’re for sale every day. Nothing has changed there,” he said. “I think what we’re trying to say is that we’re committed to all options on the table. No sacred cows. As the board went through the review process, all options were considered.”
The announcement comes three weeks after investor Dan Loeb, who runs the Third Point LLC hedge fund, announced a 5.65 percent stake in Campbell. Loeb immediately pressed for a sale of the entire company as “the only justifiable outcome,” according to Reuters.
It remains to be seen if Thursday’s announcement will be enough to satisfy Loeb.
Denise Morrison stepped down as Campbell CEO in May after a string of poor results. On the same day, the company announced a review of its portfolio and named McLoughlin interim CEO.
McLoughlin said the company continues its search for a new CEO, a position for which he “has not thrown his hat in the ring ... but is all in while the board wants him to be.”