Third Point Sends Letter to Shareholders Regarding Campbell’s Record of Putting the Interests of Billionaire, Insider Heirs...
November 05 2018 - 9:18AM
Business Wire
Asserts Shareholders and Employees Have Been
Repeatedly Misled About the Consequences of Share Buyback Programs
and the Implications of Certain Disastrous Acquisitions
Believes Twenty Years of Buybacks Occurred
Without Disclosing That One Result Was to Give the Two Billionaire
Dorrance Siblings on the Board Almost Total Control Over the
Company’s Direction
Reminds Shareholders that the Entrenched
Board’s Legacy of Value Destruction Includes an Approximately 20%
Drop in Share Price This Year Alone
After Considering the Current Board’s History
of Destroying Your Value, We Urge Shareholders to VOTE THE WHITE
CARD to Elect the Independent Slate and End This Reign of Error
Third Point LLC (LSE: TPOU) ("Third Point"), a New
York-based investment firm managing approximately $17 billion in
assets and a holder of approximately 7% of the outstanding common
shares of Campbell Soup Company (NYSE: CPB) ("Campbell" or the
"Company"), has mailed a detailed letter to shareholders regarding
Campbell’s record of putting the interests of billionaire, insider
heirs ahead of independent shareholders. The full text of the
letter can be found here and below.
As a reminder, we encourage all shareholders to also review our
Case for Change to understand more about why the Independent Slate
will respect shareholder voices, end the Entrenched Board’s reign
of error, and set Campbell on a new and profitable path. We urge
all shareholders to VOTE THE WHITE CARD to elect the Independent
Slate.
***
November 5, 2018
Dear Fellow Campbell Soup Company Shareholder:
Campbell’s shareholders and employees
have been misled about the consequences of the Company’s share
buyback programs and the implications of some of its
purchases. Campbell has done twenty years of stock
buybacks without disclosing that one result was to give the two
billionaire Dorrance siblings on the Board almost total control
over the Company and the practical ability to block any important
decisions they do not like. The Company’s recent all-cash
acquisition of Snyder’s-Lance has saddled Campbell’s with massive
debt that is now heavily weighing on the Company but benefitted the
billionaire siblings by allowing them to keep their control that
could otherwise have been diluted. We find ourselves asking:
Is this Company run
for ALL Shareholders or for the Benefit of Two Billionaire
Insiders?
We believe
SHAREHOLDERS DESERVE THE FACTS and the Incumbent Board and the
Company should answer these tough questions.
The Facts on
Buybacks:
- The Company touts that it has made
$11.3 billion in share buybacks since 1988 following programs
authorized by the Board.
- In 1996, the year the Company started
its first large buy-back, the Dorrance siblings beneficially owned
107 million shares, which was 21.5% of the outstanding stock.
Today, they own only 100 million shares after disposing of almost
7% of their shares over the past 22 years. Yet because of the share
repurchase programs, their percentage ownership has swelled to
32.8%. This is a 52% increase in
control despite a reduction in
ownership!
- The Company’s charter requires a
two-thirds supermajority to approve major corporate transactions
like important mergers and sales.
- Based on the supermajority
requirements, the buybacks have provided the Dorrance siblings with
blocking rights over any major decision shareholders may be
asked to make. Allowing this creeping control to happen was not
fair to other shareholders and shows the Board has been asleep at
the switch.
The Facts on the Snyder’s-Lance
Acquisition and Immense Debt:
- In 2017, the Company announced the
largest acquisition in its 149-year history, Snyder’s-Lance, for $6
billion in cash. The Company
borrowed the cash to consummate the transaction.
- Putting aside the extremely high price
paid, the Company neither insisted on using stock for a portion of
the purchase price nor conducted an equity offering to fund the
deal, even though Campbell’s stock was trading close to $50 per
share on the date of the announcement.
- The effect? Dorrance-sibling control
remained undisturbed, but the Company’s once-pristine balance
sheet is now saddled with net debt equal to more than 5X its
EBITDA, making it the most levered company among its
peers.
- If the Company had issued equity to
fund Snyder’s-Lance, it would be significantly less levered, and
more able to weather the operational blunders this Board has
overseen.
- So why not issue equity? Issuing
equity to third parties would have meant a significant dilution
of Dorrance control unless they purchased additional shares in
the offering, something they have not done in over 20 years. Also,
at least in the case of Mr. Dorrance, purchasing more shares might
prove difficult given he has already pledged hundreds of millions
of dollars of his shares to support his cash borrowings.
The Facts on Corporate Governance and
Disclosures:
- Mr. Dorrance was Co-Chair of the
Finance and Corporate Development Committee in 1996, and directly
responsible for approving these buybacks. Ms. Dorrance Malone
served on the Finance and Corporate Development Committee when the
Snyder’s-Lance transaction was structured as all cash.
- The Company never disclosed the
conflict of interest inherent in the buy-back program, nor the risk
to investors that, thanks to the supermajority provision and the
buy-backs, investors would effectively have no say in the
Company’s most important transactions.
- The Company has not disclosed whether
the desire to retain control was a factor in its decisions relating
to the funding of the Snyder’s-Lance acquisition.
The Two Key Questions:
- How could the Board of Campbell’s,
who are duty bound to look after your interests, fail to protect
independent shareholders?
- We believe not insisting on protective
provisions (such as permitting buybacks to benefit all shareholders
but not increasing the billionaire insiders’ incremental vote) to
prevent the “creeping control” by the Dorrance siblings is a breach
of the fundamental duties of this board.
- Why was this “creeping control” never
listed as a risk factor associated with the buyback policy?
- Did the Board not offer stock or
conduct an equity offering to fund its largest acquisition ever,
saddling the Company with unprecedented debt, because the Dorrance
siblings wanted to retain their blocking position?
Does this Board really represent you or does
it represent the Two Billionaire Insiders?
The Independent Slate is running to replace the Entrenched Board
because we believe that with a flat stock price over 20 years,
Campbell has been focused on serving someone other than its public
shareholders and employees.
VOTE THE WHITE CARD TO LEARN THE ANSWERS TO THESE
QUESTIONS AND END THE BOARD’S REIGN OF ERROR. Learn more about our
plans at www.refreshcampbells.com.
***
Your Vote Is Important, No Matter How Many or How Few Shares
You Own!
PLEASE REMEMBER TO CAN THE COMPANY’S CARD! If you
return a Campbell’s proxy card – even by simply indicating
“withhold” on the Company’s slate – you will revoke any vote you
had previously submitted for the Third Point nominees on the
WHITE proxy card.
IMPORTANT INFORMATION
On September 28, 2018, Third Point LLC filed a definitive proxy
statement and on October 1, 2018 filed Supplement No. 1 thereto and
on October 9, 2018 filed Supplement No. 2 thereto (collectively,
the “Definitive Proxy Statement”) with the U.S. Securities and
Exchange Commission (“SEC”) to solicit proxies from stockholders of
Campbell Soup Company (the “Company”) for use at the Company’s 2018
annual meeting of stockholders. THIRD POINT STRONGLY ADVISES ALL
STOCKHOLDERS OF THE COMPANY TO READ THE DEFINITIVE PROXY STATEMENT
BECAUSE IT CONTAINS IMPORTANT INFORMATION. THE DEFINITIVE PROXY
STATEMENT ALSO INCLUDES INFORMATION ABOUT THE IDENTITY OF THE
PARTICIPANTS IN THE THIRD POINT SOLICITATION AND A DESCRIPTION OF
THEIR DIRECT OR INDIRECT INTERESTS THEREIN. The Definitive
Proxy Statement is available at no charge on the SEC’s website at
http://www.sec.gov and is also available, without charge, on
request from Third Point LLC’s proxy solicitor, Okapi Partners LLC,
at (855) 208-8902 or via email at CPBinfo@okapipartners.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181105005606/en/
Media:Third Point LLCElissa Doyle, 917-748-8533Chief Marketing
Officeredoyle@thirdpoint.com
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