Jana Takes Action As ConAgra Continues to Underperform
19 Jun 2015 --- The activist hedge fund Jana Partners LLC has built a 7.2% stake in ConAgra Foods Inc and said it was prepared to nominate directors to the company's board to help address "persistent underperformance" since the acquisition of RalCorp in 2013.
According to news agency Reuters, since the $5 billion acquisition of RalCorp, ConAgra has missed its forecasts repeatedly, cut long-term targets, not increased dividend and faced operating performance challenges, Jana said in a regulatory filing on Thursday.
The hedge fund said it was prepared, if necessary, to nominate three directors who had the expertise to help ConAgra review its strategy, address operational performance and costs, optimize capital structure and review "various potential alternative transactions and structures".
Jana's three nominees include its founder Barry Rosenstein, former Nestle USA Chief Executive Brad Alford as well as Diane Dietz, who used to oversee supermarket chain Safeway Ltd's private-label business.
ConAgra became the largest U.S. private-label food company when it bought Ralcorp, but since then the business has fallen short of profit targets due to cut-price deals Ralcorp entered into with retailers before the takeover.
ConAgra Foods issued a statement in regard to Jana Partners’ investment in the company, which it learned of on June 17: “ConAgra Foods’ Board of Directors and management team are committed to acting in the best interests of all shareholders, and we welcome shareholder engagement. We look forward to opening discussions with Jana Partners after the ConAgra Foods’ June 30 fourth-quarter earnings announcement, and discussing their views on shareholder value creation at ConAgra Foods.
Additionally, the Board of Directors has amended the company’s bylaws to extend until July 8 the deadline for the submission by shareholders of nominees for election to the Board of Directors. This extension applies for the September 2015 annual meeting. Previously, the deadline was June 21.
ConAgra's shares rose 6.4 percent in extended trading.
