It was never going to be easy for billionaire investor Daniel Loeb to win control of Campbell Soup's (CPB 1.64%) board of directors. But the battle became even more difficult for him after heirs of the soup company's founder pledged to cast their shares in support of Campbell's current board members. Because these heirs control approximately 41% of the shares outstanding, Loeb's plan to replace all 12 members on the board has become next to impossible.

Mounting pointed attacks

Ahead of the Nov. 29 annual shareholder meeting, the factions have become more acrimonious and the partisans more entrenched in their positions. Loeb's Third Point hedge fund recently increased its stake in Campbell Soup to 7% and has warned the company not to name a new CEO as it intends. Third Point has also sued the soup maker, alleging it distributed incomplete and misleading proxy information to shareholders to win their support.

Boy eating bowl of soup

A hedge fund operator says Campbell Soup's performance has been anything but mmm mmm good. Image source: Getty Images.

Loeb contends that Campbell did not provide "adequate and complete information" on the exit of former CEO Denise Morrison, who abruptly quit the company on May 18, the same day Campbell released its third quarter earnings report. He also claims that board member Bennett Dorrance has a conflict of interest because he has pledged some of his shares as collateral for loans.

Campbell's independent board chairman Les Vinney wrote to shareholders last month, telling them that Loeb's slate of candidates are "underqualified" and the hedge fund manager's sole mission is to sell the company, making his discussions of effecting a turnaround for Campbell a "charade." He wrote that Loeb has "at best, a superficial understanding of the food industry and the company."

Different views over how much should be sold

Selling the whole company has been the primary goal of Loeb and his Third Point hedge fund. Back in May, when Campbell Soup announced it was initiating a strategic review of its options, Loeb said that years of mismanagement at the company meant "the only justifiable outcome of the strategic review is for [Campbell] to be sold to a strategic buyer."

However, Campbell reached a different conclusion in its review. It determined that the best course of action was selling its international operations and its fresh foods division, which includes brands like Bolthouse Farms, Garden Fresh Gourmet, and Arnott's Biscuits, while pursuing a turnaround for the rest of the business.

Last month, Loeb told shareholders that Campbell's key brands were rapidly losing market share and maintained that the soup maker could fetch between $52 and $58 per share if it were sold whole.

A high hurdle

Shares of Campbell Soup fell to as low as $32 a share in the aftermath of the disastrous third-quarter earnings report and Morrison's messy exit. While the stock rallied to around $42 as Loeb sought to angle a position on the board, it has since fallen back to $37 per share, perhaps due to the family members' announcing their support for the current board.

While Loeb has George Strawbridge, Jr. -- another descendant of the founder -- in his camp, Strawbridge has a less than 3% stake in the business and his ability to influence other family members is apparently limited.

The new united front of Campbell Soup's top shareholders against Loeb and his slate of nominees suggests that the hedge fund operator will fall well short of his goal of replacing the whole board. That will prevent Third Point from forcing a sale of the company.

Third Point's lawsuit asks the court to postpone the annual meeting until the board corrects the "misstatements" made in the proxy materials, which would give Loeb more time to rally support. It's a difficult battle being waged, and the likelihood of success seems slim. But little hope is not no hope. After another year of poor results -- Campbell Soup's organic sales fell 2% in fiscal 2018 -- shareholders might be ready to shake up the company's board.