Campbell’s: Soup to…Nuts?

Before I forget about it or it becomes really old news, I wanted to just quickly say:  Campbell’s Soup Company (CPB) is a total train wreck.  

So, not only did they tank the last quarter, based largely on totally failing to know how to operate their “fresh” business they bought within like the last year, they have JUST closed on a huge and pricey acquisition of Lance Snyders.  Nicely levering the you know what out of their balance sheet.

Morrison, the architect of this travesty, retires and they appoint, Keith McLoughlin, a guy from the board as interim CEO.  He says we are engaging in a portfolio review and “I really supported this LNCE acquisition.  It’s going to be great.”

I also love how the retirement announcement and “CEO transition plan” mentioned nothing about any problems or underperformance or any of that “recent unpleasantness.”  Just lauding the heck out of her contributions and “greatly improving” the growth profile.  Ugh.  Flashing signal.  DO NOT WANT.

Was he not on the board for the prior travesty of an acquisition of Bolthouse farms?  Yes, he was.  He didn’t take questions, so no one could ask him if he opposed that acquisition.

Also, why is this guy running the “portfolio review” prior to them hiring someone to run the portfolio as reviewed?  They are no doubt going to get some A+ candidates, if they have zero input on the businesses they are going to be stuck with, and with that levered up balance sheet and shrinking operating margin they inherit.  It seems the new CEO should be hired first and then major changes, if any, to the portfolio undertaken.  The businesses to retain or sell should be something the new CEO is interviewed on.

FYI, this McLoughlin guy was previously CEO of Electrolux.  He “retired” after his plan to acquire a GE business (prior to the implosion of GE) was blocked by regulatory opposition, causing Electrolux to eat a ~$175 million dollar termination fee.

In fairness, Haier ended up buying the business for like $2 billion more, so he almost got a Jeff Immelt special.  Nonetheless, I don’t think this guy can exactly be labeled king of deals.  First, he was buying a GE business pre-implosion.  Highly suspect.  Second, as I recall, it was kind of obvious to most commentators (everyone) that anti-trust scrutiny was an issue with the GE appliance unit sale.

So he arguably pissed away a couple hundred million dollars on an obvious deal hurdle via the break fee.  Based on the timing of his exit from Electrolux, that seems to be how the Swedes saw it.  Yeah, I would definitely let him “reshape the portfolio,” prior to hiring someone who is going to have to actually run the business.

I am still long CAG (which is starting to get some analyst love….told you so on the frozen foods, Millenials, bowls thing, btw).  Maybe CAG can get some brands on the cheap from CPB and Connolly can do his thing.  Maybe KHC will buy these guys and gut them (like they seemingly deserve).  Until then, however, CPB is a “yikes, PASS!”