Third Point suffers setback as court rejects bid to delay Campbell proxy vote

7 November 2018 4:00pm

2 November 2018. By Jason Booth.

A judge has rejected a bid by activist hedge fund Third Point to delay an upcoming shareholder vote to elect 12 directors of Campbell Soup. The fund's request for expedited discovery and the ability to depose three Campbell board members ahead of the Nov. 29 annual general meeting was also refused.

The decision marks a setback for the activist fund headed by Daniel Loeb, which had sought to use a vote delay to make its case to investors and to depose three directors, Bennett Dorrance, Mary Alice Dorrance Malone and Chairman Les C. Vinney.

Presiding judge Nan S. Famular of the Superior Court of New Jersey said in a verbal ruling that Third Point had "failed to meet the standard needed for expedited discovery and the election is to take place on time."

In a lawsuit filed last week, Third Point accused Campbell directors of breaching their fiduciary duties to shareholders “by engaging in a deliberate campaign of misinformation designed to secure their re-election via a misinformed electoral vote.” Third Point said it would seek an injunction blocking the vote unless more information was forthcoming.

Specifically, Third Point was seeking documents and information related to the qualifications of company directors, Campbell’s just-completed strategic review, its succession plan for a chief executive officer, and Dorrance’s pledge of shares as loan collateral.

In her ruling, judge Famular determined that Campbell “has disclosed sufficient information in the proxy material and has not omitted any material information,” adding “proxy materials are not required to state opinions, legal theories or plaintiff’s characterizations of the facts.”

Case will continue

While expedited discovery and a delay in the AGM were rejected, the case itself will continue.

“We are pleased that the judge made clear that our case will proceed, although expedited discovery was not granted,” Third Point said in a statement. “We will proceed with broad discovery, depositions, and documents requests.”

Third Point was seen to have an uphill battle to prevail in its legal bid to delay the AGM, as it would have required evidence of gross errors and omissions in Campbell’s proxy material.

But with discovery continuing, albeit at a slower pace, Third Point might still succeed in obtaining damaging information, such as e-mails, that could compel Campbell to seek a settlement.

It was a tactic that worked well for Third Point in its proxy battle against auction house Sotheby’s in 2014: It sued, was granted discovery and found embarrassing e-mails that it used to make its case. Third Point eventually lost the court case, but the auction house agreed to a settlement placing Loeb on its board.

Campbell Soup’s share price was down 3.5 percent in midday trading on Friday.

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