Campbell Soup has tapped management consulting firm Deloitte to help guide its previously announced strategic review, people familiar with the situation tell CNBC.
Campbell announced in May it was conducting a “thorough and critical” review of its operations and holdings after it disclosed “unacceptable” earnings and the departure of CEO Denise Morrison.
Deloitte will help Campbell determine its next steps in the review amid takeover speculation. Deloitte is expected to tie up the review before the company announces earnings on Aug. 31, said the people, who declined to be identified because the discussions aren’t public.
The company has previously said that the board has not yet made a decision and plans to announce it at the end of the month.
“Campbell is currently undertaking a board-led comprehensive strategic and operational review of the business, including the composition of its entire portfolio, to examine all potential paths forward,” company spokesman Thomas Hushen told CNBC. “We will present a thoughtful and effective plan for enhancing shareholder value on August 30 when the Company announces its fourth-quarter and full-year results.”
The soup giant is already working with investment bank Centerview Partners on the review. Centerview’s co-founder, Blair Effron, has a close relationship with the soup company that dates back decades.
It may also hire a second bank, depending on its decided course of action, the people say.
The company has also begun the process of looking for Morrison’s replacement, people familiar with the matter say. One top internal candidate is Chief Operating Officer, Luca Mignini, these people previously told CNBC.
It’s previously said it’s looking at both internal and external candidates.
Campbell’s Chief Financial Officer, Anthony Disilvestro, has been serving as point person for much of the strategic review, the people say.
The challenges the soup business faces are numerous. Its wet soup business declined 1.9 percent over the past year, it told analysts in May. Its fresh food business, which includes Bolthouse Farms, is clocking a loss of roughly $50 million in earnings before interest tax depreciation and amortization (EBITDA), down from $150 million EBITDA, sources say. Meantime, industry experts say integrating its $6.1 billion acquisition of pretzel company Snyders-Lance will be a difficult.
Meantime, activist investor Third Point has taken a stake in the company and has been pushing for the business to sell, the people say.
Third Point, though, faces a path of tough resistance marked by the Dorrance family — Campbell’s largest shareholder. The company’s review was initiated prior to Third Point’s stake.
For Third Point to see its wish granted, it will need to win over enough support from the family. The descendants of John P. Dorrance — the man many say invented condensed soup — has multiplied across many different clans over the years and they aren’t all in agreement over whether to sell, some of the people say.
Third Point declined to comment.
Should the family opt to pursue a sale, one party likely to take a look is Kraft-Heinz, which would likely find significant cost savings in combining with Campbell.
Still, Kraft Heinz has been grappling with its own growth challenges. It is therefore unclear whether the ketchup-owner wants a slow-growing business likes soup, which faces competition from smaller upstarts, private label brands, as well as other categories.
Another option for Campbell to follow suit of its big peers and prune its business. That road would likely entail the sale of fresh business, which would benefit from a management team experienced in agriculture. Campbell could also sell its Australian snacking business, Arnott’s Biscuits
A further alternative would be to to spin its faster growing snack business from its soup and meals business. In that move, a private equity firm could also partner with the family to take the soup business private and out of the public eye.
