Am I Next? Major changes coming to Campbell's Foods.

It appears that asset sales, cost-cutting, and restructuring is on the menu at the iconic Camden, New Jersey-based Campbell’s if New York City, New York-based hedge fund Third Point wins a proxy fight to replace the entire board of directors. Third Point’s activism is well-known and it appears that Third Point has also taken a major position in Nestlé which it believes is poorly managed and in need of drastic restructuring. 

According to published reports, Third Point’s original intent was to arrange the sale of the entire company to maximize shareholder return on investment. 

In response to activist pressures, Campbell’s has undertaken a “strategic review,” and has suggested that its desire is “to optimize its current portfolio, divest certain businesses and pay down debt, while also working to reduce costs.” 

Campbell’s interim President and CEO Keith McLoughlin said, “Campbell’s Board of Directors considered a full slate of strategic options, including optimizing the portfolio, divesting businesses, splitting the company, and pursuing a sale. The Board concluded that, at this time, the best path forward to drive shareholder value is to focus the company on two core businesses in the North American market with a proven consumer packaged goods business model. Importantly, the Board remains open and committed to evaluating all strategic options to enhance value in the future. The entire statement can be found here.

Standard corporate-speak for trying anything to boost share prices and leave the existing board and management intact. 

There is little or no doubt that change is arriving at Campbell’s and that employees should take note.

Do you wonder, Am I Next?


Am I Next? Supervalu & Farm Fresh restructuring, mass layoffs

Another mass layoff of 1,000 employees as Minnesota-based Supervalu, Inc. continues to restructure its retail operations to transform its business into an even larger nationwide wholesale supplier of grocery to other retailers.

In this phase, Supervalu will abandon the 60-year old Farm Fresh brand and its stores and pharmacies serving Virginia and North Carolina. Some of the stores will be sold to other retailers who may accommodate some of the displaced workers. 

Of course, Supervalu President and CEO Mark Gross offered up the obligatory corporate-speak, “This decision was not taken lightly given the impact on our employees and the communities we serve, but we strongly believe this decision is in the best long-term financial and strategic interest of our business. Our leadership team and board of directors remain committed to taking proactive steps to transform our business and drive stockholder value.”

In 2016, Supervalu sold Save-A-Lot and its network of approximately 1,350 retail locations. In 2017 Supervalu acquired Unified Grocers and Associated Grocers of Florida.

The employees are not the only ones at risk.

Blackwells Capital is seeking to nominate six director candidates to the nine-member Supervalu Board of Directors, effectively taking over control of the company. As you may imagine, the present Board and executives are not pleased and have issued a statement. 

“The Board and management team already have SUPERVALU’s transformation strategy well underway, and do not believe the changes to the Board proposed by Blackwells are necessary to ensure the continued execution of the Company’s initiatives to create stockholder value.

As previously disclosed, members of our Board and management team have had several discussions and meetings with representatives of Blackwells over the last several months to discuss overlapping objectives and attempt to reach a constructive path forward. Nonetheless, Blackwells has chosen to respond with a public campaign and an attempt to take effective control of the Company.

However, and as previously announced, we are committed to Board refreshment and will consider Blackwells’ candidates as we would any other potential directors to assess their ability to add value to the Board and the Company for the benefit of all stockholders.”

This appears to be another prime example where the employees are at risk from company boards and executives struggling to keep their position in the face of activist investors who only care about the financial returns and are divorced from any other considerations such as impacts on individuals and communities. 

Are you asking yourself, Am I Next?


Am I Next? Hess Corporation 300 Layoffs

Once again we find a major company, the Hess Corporation, a global energy company, embarking on a cost-cutting restructuring program that will result in at least 300, some say 700 or more, employee layoffs. According to Hess spokesperson Lorrie Hecker, “the company is also aiming to make reductions in its contractor base. We moved aggressively in 2017 to focus and up-grade our company’s portfolio. The combination of this cost reduction program and our upgraded-graded portfolio is expected to drive down cash unit production costs by approximately 30 percent" by 2020.” 

Funny, not one mention of the activists sparring with Hess in the boardroom -- like Elliot Management Corporation, which is demanding that billionaire, second-generation CEO John Hess step aside, sell certain assets to fund stock buy-backs to ramp up the price. No mention of whether or not Elliot Management Corporation will dump the stock to feather the nests of their own investors.

Are you asking yourself, Am I Next?