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Campbell Soup to Sell Units, Lay Off Workers

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From Associated Press

Campbell Soup Co. plans to lay off hundreds of workers, close plants around the country and sell some of its less profitable businesses in its latest move to boost sales and earnings.

Campbell also said Thursday that it will buy back as much as $2.5 billion worth of its stock, a step intended to make remaining shares more valuable. Details about the offer will be announced next week, it said.

The developments were cheered by many investors. New York Stock Exchange-listed Campbell jumped 6.5%, rising $4.375 a share to close at $71.875.

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“They’re obviously doing the right thing for shareholders,” said Lawrence Adelman, an analyst with Dean Witter Reynolds in New York.

Not all of the financial community cheered, however. Standard & Poor’s said it is reviewing its rating of Campbell debt for a possible downgrade because of the greater emphasis on borrowing signaled by the company’s share-buyback plans.

The sixth-largest U.S. food products company said it wants the restructuring to make it a top performer among the the world’s consumer companies.

In a move to accelerate growth in Germany and Europe, Campbell said it will buy a German soup maker, Erasco Group, from Grand Metropolitan for about $210 million. It said Germany is the biggest soup market outside the United States.

“We are poised for breaking away from our competitors in the food industry,” said David W. Johnson, Campbell’s chairman, president and chief executive. “Now, more than ever, our vision is within reach.”

Johnson was brought in in 1990 to turn around the beleaguered company by streamlining operations and focusing on its core businesses.

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Campbell said the restructuring will reduce earnings by about $160 million after taxes in the first quarter of fiscal 1997. The announcement came a day after Campbell reported a 26% increase in earnings for its fiscal fourth quarter.

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