(Reuters) - Campbell Soup and Third Point LLC are close to settling a bitter proxy contest by adding two of the hedge fund’s nominees to the U.S. food company’s board and giving the activist investor a say in selecting Campbell’s next CEO, people familiar with the matter said on Sunday.

FILE PHOTO: The logo and ticker for Campbell Soup Co. are displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 18, 2018. REUTERS/Brendan McDermid

A deal between Campbell Soup and billionaire investor Daniel Loeb’s Third Point would end one of the most acrimonious U.S. proxy battles only days before investors were scheduled to vote on Thursday at Campbell’s annual meeting.

Under the deal being negotiated, Campbell Soup would expand its board, naming two Third Point nominees, the sources said. These people will provide input on appointment of another director, expanding the board to 15 members. The hedge fund would promise to refrain from running a proxy contest in the next year, the sources said.

Through the directors it nominates, Third Point will have a say in naming the company’s next CEO. Denise Morrison stepped down from the post last May. Campbell Soup director Keith McLoughlin has filled the vacancy on an interim basis and has said he does not want the position permanently.

The company aims to name a permanent CEO before year end. Chief Operating Officer Luca Mignini is one contender, sources have said, but Third Point has said an insider would be unacceptable. The hedge fund has been courting its own candidate, according to a source familiar with the matter.

The proxy fight between Loeb and Campbell Soup has been one of the year’s most bitter. Third Point, which owns about 7 percent of Campbell Soup, was lining up support from other investors, but it was becoming increasingly clear the fund could not beat a bloc of heirs to the Campbell fortune who control 41 percent of the company and have three board seats.

The potential settlement looks similar to an offer Campbell proposed to Third Point earlier this month. Third Point had rejected the company's offer to name as directors marketing expert Sarah Hofstetter, president of Comscore Inc SCOR.O, and former Blue Buffalo CEO Kurt Schmidt, who brings operational experience. The two are now expected to join the board.

Campbell Soup and Third Point did not immediately respond to requests for comment. The Wall Street Journal first reported on the potential settlement earlier on Sunday.

Third Point surfaced as an investor in Campbell Soup over the summer, criticizing the lagging share price and spree of costly acquisitions and asking management to explore a sale. Campbell’s stock has lost about a third in value over the past two years.

One of Third Point’s main criticisms has been the board’s lack of succession planning to replace Morrison, who pushed for acquisitions, including the purchase of Snyder’s-Lance, which added to Campbell’s debt load.

When Third Point launched the proxy contest, its first since taking on Sotheby’s four years ago, it sought to oust Campbell Soup’s entire board, including three descendants of John Dorrance, inventor of condensed soup who ran Campbell’s a century ago.

It allied itself with Campbell heir George Strawbridge. Third Point later scaled back its demands and got backing for its five nominees from proxy advisory firm Institutional Shareholder Services Inc.

This year activist investors have launched 42 proxy contests at U.S.-based companies and 13 have been settled, data from Activist Insight show.

STRATEGIC REVIEW

Third Point pushed to put one of its partners on the board, saying Campbell needed financial expertise. As part of the settlement, it will now make periodic presentations to the board on financial matters, a person familiar with the negotiations said.

After Morrison departed, Campbell Soup went through a strategic review and announced in August plans to sell its international and refrigerated foods business and explore the possibility of a full sale. McLoughlin said the company had lost focus within its brands and did not do enough to keep its soups business relevant to modern consumers.

Campbell had maintained that Third Point lacked a smart plan to improve the company’s fortunes. On Tuesday, the company’s hand looked stronger when it reported a smaller-than-expected decline in quarterly earnings.

Also last week, McLoughlin met with Loeb in an effort to reach a deal, one of the sources said.