Billionaire Dan Loeb’s bid to overhaul Campbell Soup’s board is heating up as questions about a long-serving board member emerge.
Loeb’s Third Point has been expected to face an uphill battle because 40% of Campbell’s shares are held by descendants of early Campbell president John T. Dorrance and they are resistant to changes at the 149-year-old soup company CPB, -0.56% .
But nearly one-third of the shares held by descendant Bennett Dorrance — whose total stake is 15.4% — have been pledged as collateral for loans, according to proxy materials filed by Campbell Friday.
“Mr. Dorrance controls the voting of all of his 45.4 million shares, including the 14 million shares pledged to banks as collateral for loans,” Campbell said in a statement. “Mr. Dorrance has always voted his pledged shares, as he is entitled to, and will do so again this year.”
But sources close to the activist say that Loeb may highlight Dorrance’s decision to pledge company shares for loans to raise questions about Dorrance’s suitability as a board member.
Two sources who spoke directly with Loeb said the hedgie suggested to them that he had damaging information on some of the descendants’ personal and business dealings.
“He has a lot on them,” a Third Point investor said, declining to give details except to say the allegations are of the “soap opera” variety.
“I’m sure there has been communication” at least hinting about what he has with Campbell’s advisers, the investor said.
Reps from Third Point declined to comment.
Dorrance, 72, has served on Campbell’s board since 1989. Although the board has a retirement age policy, it was waived because of his “unique capabilities” as “a descendent of the company’s founder and a significant shareholder,” proxy materials stated.
As for Third Point, it took the unusual step this summer of building a 5.7% stake in a company in which the founding family owned almost half the shares.
The hedge fund has so far curried favor with Dorrance family member George Strawbridge, who has a 2.8% stake in the Camden-based soupmaker.
Third Point may also meet with family member Archie van Beuren, who holds 7.9% of shares with former Campbell director David C. Patterson, two sources said.
“If Archie sides with Dan, the other family members would not have the same confidence that they could block anything,” a source with direct knowledge of the situation said.
While Third Point has the Sisyphean task of winning a majority of Campbell shareholders when 40% are so far thought to be against him, the hedge fund is hoping that Campbell’s recent poor results will be enough to sway shareholders to try something new.
Campbell shares are down nearly 14% this year.
This story was first published in the New York Post
