Campbell Soup may sell Fresh division to former Bolthouse CEO
- Campbell Soup is reportedly in talks to sell its troubled Fresh division to a group of investors led by Jeff Dunn, the former CEO of Bolthouse Farms, The Wall Street Journal said. The soup maker purchased Bolthouse for $1.55 billion in 2012, but the Fresh division as a whole could fetch between $500 million and $700 million in a sale.
- The segment, which includes Bolthouse Farms and Garden Fresh Gourmet, has been riddled with challenges since it was created. Campbell Soup already has written down the value of the unit by $1 billion. The Wall Street Journal said the New Jersey company is in talks with other potential buyers, but current discussions with Dunn have made the most progress.
- Separately, the New York Post reported that Kraft Heinz recently looked into buying Campbell Soup — at one point saying it was willing to pay $50 a share — but the food maker ultimately passed after taking a look at its books.
After a few years diversifying away from its core packaged food business through a string of acquisitions, Campbell Soup appears to be making progress to undo what has proven to be a costly and challenging endeavor.
Since its purchase by Campbell Soup in 2012, Bolthouse Farms — a maker of carrots, smoothies, juices and dressings — has faced weather challenges and a recall. At the same time, refrigerated salsa, hummus and dips producer Garden Fresh, acquired by the company in 2015, has struggled to generate consumer interest beyond its core audience in the Midwest.
"It just kind of became one problem after another,” Brittany Weissman, an analyst at Edward Jones, told Food Dive. "They just didn’t have the knowledge base and the team in place to really understand" the refrigerated distribution system and volatility in the commodity market.
The risk for Campbell Soup is that unloading its fresh operations leaves it further exposed as a packaged food company with its core soup division and snacks operation — a segment that was recently bulked up through the $5 billion purchase of Snyder's-Lance, adding Pop Secret, Kettle and Emerald to its portfolio.
While some of Campbell Soup's problems are self-inflicted, it's facing many of the same problems as other food companies that are watching consumers flock toward healthier, fresher products. Despite this push, the decision to unload its Fresh division is a sound move that would enable the maker of Goldfish crackers and Pepperidge Farm cookies to focus on areas where the company has significant expertise — without the distractions that keep cropping up in the fresh unit.
In an effort to improve the company’s value, Campbell Soup announced as part of a strategic review in August the decision to sell the fresh business and international operations to pay down debt and reduce costs. These changes, along with the naming of Luca Mignini to the newly created role of chief operating officer, have shown the company realizes it needs to act.
It's no wonder that Campbell Soup curtailed compensation for top executives this year. CNBC reported that most c-suite executives were denied bonuses during the last fiscal year. In addition, the total compensation of four of its top five executives was reduced by more than 20%. But it may need to do more, and fast. Daniel Loeb, whose investment firm Third Point has a 6% stake in the company, has called for a sale of the company and the replacement of its entire board. With Kraft Heinz, considered by Wall Street to be the most logical buyer, passing, it's uncertain who would now be interested in stepping up to buy Campbell Soup.
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