Citing "years of abysmal oversight" and the bumbling of its CEO succession planning, billionaire investor Daniel Loeb is calling for Campbell Soup (NYSE:CPB) to sell itself to another company.

The soup maker announced in May that it was initiating a strategic review of its options. Loeb says that "the only justifiable outcome of the strategic review is for [Campbell] to be sold to a strategic buyer."

Girl eating soup

Campbell Soup's performance hasn't been mmm, mmm good lately. Image source: Getty Images.

Teaming up to attack

Third Point, Loeb's hedge fund, is reportedly working with another shareholder, George Strawbridge Jr., a descendant of Campbell's founders. Strawbridge filed a separate statement, declaring that unless Campbell's "strategic review results in a new direction ... the only reasonable approach is to reconstitute the Board."

Together, Loeb and Strawbridge have an 8.4% ownership stake in Campbell. The soup maker responded to the filings by saying that while it was committed to looking at all possible outcomes, it was "dedicated to delivering a go-forward strategy that will drive value for all shareholders."

Yet there is apparently outside interest in Campbell Soup. Kraft Heinz (NASDAQ:KHC) has been sniffing around the company, according to The New York Post. However, it seems unlikely that a deal will happen if, as reported, the cream cheese and ketchup maker would only be interested in acquiring Campbell Soup at a bargain price. Citing two sources, the Post said Kraft wouldn't pay a premium much above Campbell's existing $22 billion enterprise value.

A deal would also be complicated by the fact that members of the founding family own a collective 41% of Campbell Soup stock, and they would need to be convinced to sell their shares. It may also take substantial investment in the business to turn its operations around.

No comfort in this food business

Campbell Soup sales have fallen almost 5% over the past three years and are below where they were back in 2013 as consumers turn to natural ingredients and homemade meals. Only because of acquisitions do analysts forecast that revenue will rise this year.

Campbell bought organic broth and soup maker Pacific Foods for $700 million late last year. In March, it completed its $6 billion acquisition of pretzel and savory snack company Snyder's-Lance. It also invested $35 million in the Chef'd meal-kit delivery business, which went belly up.

Although Campbell continues to buy into the latest trends, it has failed to translate that into sustainable growth. In 2013, for example, it bought Bolthouse Farms for $1.5 billion, hoping to cash in on the growing consumer interest in fresh food. However, weather-related issues -- particularly a prolonged drought in California -- hurt Bolthouse's carrot business. As a result, Campbell Soup has taken impairment charges totaling more than $350 million over the past two years.

The company also bought organic baby food and snacks maker Plum Organics in 2013. Though sales have risen in that business, they haven't gone up nearly enough to offset declines elsewhere.

Campbell's shrinking prospects had caused its shares to fall by more than 40% prior to the company announcing its intention to pursue a strategic review and reports that Kraft Heinz was possibly interested in making an offer.

Campbell isn't what buyers need

But Kraft Heinz hasn't made an offer, and its own performance hasn't been much better. Sales fell 1% last year following the 2015 merger between Kraft and Heinz. It's hard to see how Campbell Soup would add the growth factor that Kraft Heinz needs. 

General Mills (NYSE:GIS) was also reportedly interested, but like Campbell, Kraft, and numerous other consumer food companies, it finds itself in a bit of trouble. Its sales are down more than 10% over the past three years, primarily due to declines in its North American yogurt business. But while General Mills is looking for growth, it recently bought leading natural pet food maker Blue Buffalo for $8 billion, making an even bigger acquisition of a struggling food giant seem doubtful.

Key takeaway

Campbell Soup is a diversified business today, with exposure to some of food's biggest trends, which is a plus. Another company's management team might be able to capitalize on some of those divisions, but it would be a costly experiment to find out, which is why Campbell may end up going it alone.

Jettisoning some of the company's portfolio that hasn't worked out as planned would allow Campbell Soup to focus on the parts that are performing well and would give it the financial resources to do so. Kraft or General Mills might be more interested in picking up some parts of the business rather than trying to swallow the soup maker whole.

Management has said it will reveal the results of its review by the end of August. However, that just might leave Loeb fuming over further bumbling, and lead to a broader clash that may not be resolved for months to come.