NEW YORK (Reuters) – Activist investor Third Point LLC is suing Campbell Soup Co (CPB.NOn Thursday, the Board of Soup and Snack Manufacturers claimed that investors misled the competence of their directors and the way they conducted a recent strategic review.
FILE PHOTO: Canned Campbell's tomato soup are seen in a supermarket shelf in Seattle, Washington, USA February 10, 2017. REUTERS / Chris Helgren / File Photo
The lawsuit is the latest in a fierce proxy contest in which multi-billion dollar investor Dan Loeb and his third-party hedge fund seek to replace Campbell's 12-member board of directors to appoint its own directors and fuel its growth.
In a lawsuit at the State Superior Court in Camden, New Jersey, Campbell's hometown, said Third Point, Campbell and his board "violate their fiduciary duty to Campbell shareholders by withholding key information for shareholders to assess, as with the Annual General Meeting vote meeting. "
It asked the court to prevent Campbell from holding its annual meeting on November 29 until the board corrected what Third Point called its false allegations.
Three heirs of the condensed soup inventor John Dorrance, who led the company a century ago, sit on the board and want to be re-elected. Together, they control 37 percent of Campbell's stock. Third Point has asked the court to postpone shareholders' votes to the board until the company corrects what the third point described as a misinformation by the board.
The lawsuit alleges that the company did not disclose any critical information about its directors, including Dorrance's grandchild Bennett Dorrance. She accused the company of not sufficiently explaining what Dorrance had to do with its business plans and investments, among other things.
Dorrance did not respond immediately to a telephone comment.
On Thursday, Campbell's Board Chairman had written a letter to investors stating that the proposed third-party directors were unable to oversee the company and that Third Point did not submit any new ideas or specific strategic plans have.
"Third Point has, at best, a superficial understanding of the food industry and the company, as demonstrated by its non-substantive plan with platitudes and buzzwords in the business world," the letter said.
Such lawsuits are not uncommon in proxy battles, as both sides seek every advantage. Third point said in the lawsuit that it needs the court's help to hold a "meaningful proxy contest" and for investors to make fully informed decisions.
Third point says in its lawsuit that shareholders do not have enough information to evaluate the company's strategic plans, which include selling some departments and finding a permanent CEO to replace Denise Morrison, who left in May.
"Without further information about its strategic plan, which the Board has withheld and which shareholders are unaware of without further disclosure, the November 29 election will be a farce," it said in the lawsuit.
Third point also said that investors are in the dark about the new CEO selection process.
Reporting by Svea Herbst-Bayliss and Tom Hals; Editing by Bill Rigby