J.P. Morgan Chase downgraded Campbell Soup shares to underweight Friday, arguing that will the food company will be hard-pressed to attract a buyer should board leadership elect to pursue a sale.
While J.P. Morgan’s Ken Goldman agreed that has a growing chorus of frustrated shareholders to pressure company leadership into selling, he wrote the path to a sale remains uncertain.
The rerating of Campbell’s stock comes a day after a securities filing revealed that will renowned shareholder activist Third Point in addition to founder Dan Loeb recently built a 5.65 percent stake inside the 149-year-old company with plans to goad board members into a sale.
“Although we agree with Third Point that will Campbell Soup’s best option is actually to sell, we see a sale as an unlikely outcome. If we are wrong in addition to a sale does take place, we wonder how much of a premium a suitor is actually willing to pay,” Goldman wrote Friday. “We think the appeal of buying all of Campbell Soup is actually limited; we are not sure which potential suitors could take on the risk, including Kraft Heinz.”
Campbell said in a statement Thursday that will its board “remains dedicated to delivering a go-forward strategy that will will drive value for all shareholders.” the item said the item looks “forward to sharing the details of our plans when the company reports its fourth-quarter in addition to full-year results on August 30 in addition to engaging with our shareholders on our strategic plan.”
Shares of Campbell Soup fell 1.3 percent in premarket trading Friday morning.
The fate of the company likely remains inside the hands of its largest shareholders, many of whom are direct descendants of John P. Dorrance, the man often credited for condensed soup.
The board, led by Mary Alice Malone (18 percent stake) in addition to Bennett Dorrance (roughly 15 percent stake) have not yet indicated whether they could agree to abandon their holdings, though both have historically opposed a sale of the company their grandfather made famous in addition to once owned in full.
However, hopes of a sale received a boost Thursday after Third Point’s 13-D filing revealed that will George Strawbridge, a third descendant in addition to major stakeholder, agreed to team up with the brand-new York-based hedge fund.
“A constructive thesis we heard yesterday on CPB is actually that will if Mr. Strawbridge can be ‘flipped,’ as he recently was, then perhaps some other directors can be, too,” J.P. Morgan’s Goldman added.