Campbell Soup Plans to Sell International Business and Fresh Unit

Campbell Soup Co. CPB 0.40% plans to sell its international operations and refrigerated-foods business, abandoning efforts to become a more fresh-oriented company and leaving the door open to a full sale.

Campbell plans to divest the two businesses, which bring in $2.1 billion in annual revenue under brands including Bolthouse Farms, Arnott’s and Kelsen, the company said Thursday. The Wall Street Journal had reported the moves earlier Thursday.

The company that remains will be U.S.-focused, with revenue split nearly evenly between Campbell soups, meals and drinks, and its more promising snack business. It will also have operations in Canada.

The planned divestitures would cut Campbell’s revenue by roughly 25%. But that may not be enough to appease activist investor Daniel Loeb of Third Point LLC and George Strawbridge Jr., a descendant of the inventor of Campbell’s condensed soup, who together are urging a full sale. They revealed a combined 8.4% stake in the company earlier this month and could still launch a proxy fight for board seats within the next few weeks.

Third Point has said a sale to another food maker is “the only justifiable outcome.”

Campbell hasn’t discussed its plans with Messrs. Loeb or Strawbridge, though management and the board think divesting these two businesses will make the remaining company a more attractive asset to potential future bidders, according to people familiar with the matter.

The fresh and international businesses have drawn interest from several potential bidders, including private-equity firms, the people said.

Campbell plans to use proceeds from the sales of the businesses to reduce its long-term debt, which more than tripled after it bought Snyder’s-Lance pretzels, chips and nuts earlier this year. The company also plans to boost the size of its cost-cutting initiative.

The fresh-food division Campbell is putting up for sale includes Bolthouse Farms refrigerated juices, salad dressings and bags of carrots, Garden Fresh Gourmet salsa and hummus, and refrigerated soups. The international business includes Australia’s Arnott’s biscuits and the Kelsen Group, which makes Danish butter cookies that are popular in China and Hong Kong. It also includes operations in Malaysia, Indonesia, Japan and Hong Kong.

Interim Chief Executive Keith McLoughlin was deeply involved with the board-led strategic review, and the board finalized its plan in the past several days, the people said.

Former CEO Denise Morrison, who resigned abruptly in May, had staked Campbell’s ability to keep up with what she called a “seismic shift” in eating habits on the success of the fresh-foods division.

That backfired, and Campbell’s has written down the value of the division by about $1 billion; it bought Bolthouse for $1.55 billion in 2012, shortly after Ms. Morrison became CEO. But Campbell wasn’t familiar with how to run a fresh-foods business, and poor carrot harvests and juice recalls hurt Bolthouse. The company tried to restructure the division and installed a new management team, but sales and profit continued to suffer.

Getting rid of the complex, low-margin fresh-food business will allow Campbell to focus on trying to revive its soup sales and expand its snack brands.

While the Snyder’s acquisition, for $6.1 billion including debt, has helped boost sales growth, the company’s high debt load could make it more vulnerable to a takeover. Falling soup sales and Campbell’s misfires in the fresh-food aisle have dragged its shares down by roughly one-third over the past two years.

Campbell’s board of directors told investors in May after Ms. Morrison’s departure that everything was on the table and it began a strategic review of the soup giant. Ultimately, the decision on a sale would rest with descendants of the man who invented Campbell’s condensed soup, John T. Dorrance. Family members hold roughly 40% of the shares, and a two-thirds shareholder vote is required to approve a sale, according to the company’s charter.

Write to Cara Lombardo at cara.lombardo@wsj.com and Annie Gasparro at annie.gasparro@wsj.com

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