Jana Companions took a stake within the struggling potato firm.
Shares of Lamb Weston (LW 9.65%), one of many world’s largest producers of frozen potatoes, had been shifting increased at this time on information that an activist investor had taken a stake within the struggling meals inventory.
As of 11:19 a.m. ET, the inventory was up 9.9% on the information.
Picture supply: Getty Pictures.
Jana sees a possibility
In line with a report in The Wall Road Journal, Jana Companions has collected a roughly 5% stake in Lamb Weston with the intention of pushing the corporate to think about a sale.
Jana disclosed the stake in a Securities and Change Fee (SEC) submitting later this morning, saying it sees a historical past of self-inflicted errors which have led to its underperformance, and that it goals to debate its turnaround proposals with the board of administrators and administration.
Jana additionally sees alternative for Lamb Weston to enhance its capability utilization, capital spending, and different core working capabilities like procurement and planning. Jana stated it deliberate to encourage a evaluation of strategic options, which generally implies a sale.
The activist investor typically targets the meals trade and has had success previously. The agency took a stake in Entire Meals and was in a position to engineer its sale to Amazon.
What it means for Lamb Weston
Lamb Weston is coming off two disappointing earnings studies, and is battling, amongst different issues, declining french fry gross sales at McDonald’s. In its most up-to-date quarter, the corporate reported a 1% decline in income to $1.65 billion, and adjusted working earnings fell 56% to $105 million.
Lamb Weston has but to situation an announcement, however traders appear to anticipate it to be receptive to talks with the activist.
On condition that weak spot and Jana’s observe file, it isn’t shocking traders are reacting positively to the information.
John Mackey, former CEO of Entire Meals Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of administrators. Jeremy Bowman has positions in Amazon. The Motley Idiot has positions in and recommends Amazon. The Motley Idiot has a disclosure coverage.
