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Campbell plans job cuts
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September 5, 1996: 8:45 p.m. ET
Soup giant announces $2.5 billion stock repurchase, says it needs to be lean
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NEW YORK (CNNfn) -- Campbell Soup Co. on Thursday announced plans to cut 650 jobs from its North American operations and buy back $2.5 billion in stock as part of a massive restructuring.
Following several weeks of speculation, during which published reports estimated layoffs could reach into the thousands, the company said it was initiating the restructuring to boost shareholder value and allow the company to expand existing brands and prepare for new acquisitions.
The announcement came just hours after the company said it agreed to purchase Erasco Group, a leading German soup company, from Grand Metropolitan for $210 million.
"We are poised for breaking away from our competitors in the food industry," said Campbell Chairman David W. Johnson. "This strategic growth plan is designed to vault our company into the ranks of the world's renowned consumer goods companies, in terms of financial profile and market multiple."
He said Erasco was "a terrific acquisition" because it is the leading brand in Germany, is the No. 1 canned soup and its market share is more than twice that of its closest competitor.
The announcement comes after a year in which the company posted record earnings and overseas soup sales that climbed up 7 percent.
Nomi Ghez, food analyst at Goldman Sachs, said Campbell's decision to buy back $2.5 billion in stock was definitely a surprise.(204K WAV) or (204K AIFF)
Johnson also said the company will cut 175 jobs at its Camden, N.J., headquarters and another 475 jobs at facilities in North America. It plans to close a noodle plant in Georgia and a poultry research operation in Arkansas and sell or restructure other operations in Georgia, Florida, Nebraska and Minnesota.
The combined operations being sold or shut down were expected to account for $500 million in sales over the next two years.
The company, which said it will take a $160 million after-tax charge in the first quarter to cover the restructuring, plans to launch a more aggressive advertising campaign to promote its soups, Pepperidge Farms Goldfish crackers, V-8 and Swanson Frozen Foods brands. No statement was made about how much money will be spent on advertising.
Johnson said the restructuring was necessary for the company to remain competitive and take advantage of recent acquisitions.
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Campbell Soup Co.
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