Jana Partners Activist Investment Group Pushes for Possible Lamb Weston Sale

In a SEC regulatory filing recently published, the activist investment group, Jana Partners, stated that it had opened a new tab, developed a new position in Lamb Weston, and might pressure the French fry manufacturer to think about selling itself.

Jana said it wanted to see a strategic review where the firm and lenders would examine capital spending, operating problems, and share-repurchase strategy. Jana owns 5% of the Eagle, Idaho-based company, according to Reuters.

“JANA, with the assistance of the other Reporting Persons and Continental Grain (as defined below), intends to have discussions with the Issuer's board of directors and management regarding topics including: (1) the litany of self-inflicted missteps that have led to underperformance for shareholders; (2) financial performance and core operating deficiencies in areas including customer demand planning and retention, raw potato procurement, ERP system implementation and management, product and manufacturing quality assurance, pricing strategy, retail execution and overhead cost management; (3) capital spending, including aligning capacity expansion projects with utilization, improving returns on capital, re-evaluating long-term capital expenditure targets and providing detailed public disclosure on other capital spending amounts; (4) share repurchase strategy and execution; (5) investor communications, including by acknowledging the magnitude of impact from the Issuer’s mis-execution on its recent capacity utilization levels, which we believe trail North American peers; (6) management compensation practices, including adding targets focused on returns on capital to deprioritize pursuit of growth at any cost; (7) environmental, health and safety practices; (8) oversight and disclosure regarding use of the Issuer’s corporate resources; (9) corporate governance, board composition and management; and (10) initiation of a review of strategic alternatives, particularly given the history of interest in the Issuer and the Issuer’s poor performance for shareholders,” the SEC filing states.

The hedge fund also hinted that it would run for board positions at the USD11bn corporation.

Lamb Weston's stock rose 11% to USD78.78 after news broke of Jana's ownership. In January, the stock fell 26 percent.

According to the filing, Jana is collaborating on the investment with Continental Grain, a privately held corporation that owns and runs agribusiness and food enterprises. Additionally, it is collaborating with Timothy McLevish, the former executive chairman of Lamb Weston. The business acknowledged that it was aware of Jana and Continental Grain's regulatory filings.

“We regularly engage with our shareholders to better understand and consider their views and will continue to do so,” a representative said.

Amid decreased restaurant spending and more competition in foreign markets, Lamb Weston announced job losses and lowered its annual profit prediction in October.

Lamb Weston, the largest manufacturer of French fries in North America, supplies McDonald's and other fast food chains with its potato puffs and hash-brown patties, among other items.