An activist investor has almost 10% of the shares in Freshpet Inc.
and plans to pressure the pet food company to make changes to boost its stock price and explore a sale, according to people familiar with the matter.
Jana Partners LLC believes in Freshpet FRPT 15.88%
could be an attractive target for larger competitors in the sector that have shown appetite for deals in recent years, the people said. It also wants the company to consider other changes, such as improvements to operations and capital allocation.
The activist hedge fund has recruited former Kraft Foods Chief Financial Officer Timothy McLevish, as well as Diane Dietz, who was CEO of skin care product maker Rodan & Fields, and the former CEO of Jarden Corp. James Lillie for help with the campaign. said the people.
Two former professional athletes — basketball star Dwyane Wade and baseball star CC Sabathia — are serving as special advisers, they said.
Freshpet specializes in refrigerated high-end pet food made with blends of meat, vegetables and fruits. Secaucus, NJ-based Freshpet has been struggling lately; when the company released its second-quarter earnings in August, the company revised its guidance due to inflationary pressures and quality control issues. Its shares were down about 80% from their April 2021 high and about 60% so far this year through Wednesday.
At its peak, Freshpet had a market capitalization of about $8 billion; it is now just under $2 billion. Freshpet shares closed down 16% after The Wall Street Journal reported on Jana’s plans.
Earlier this month, the company shuffled several executive roles in an effort to improve its operations and said its CFO was resigning. CEO Billy Cyr said at the time that the company’s rapid growth over the past few years had created “a unique set of opportunities and challenges.”
In recent years, food makers including Nestlé SA and General Mills Inc. have pointed to pet food sales as a bright spot as consumers spend more on higher-end offerings. Nestlé owns the Purina brand, among others, while General Mills’ portfolio includes Blue Buffalo, a premium brand it bought for about $8 billion in 2018.
There have been a number of investments in the sector recently, including Mars Inc.’s acquisition of a small producer of fresh pet food earlier this year. In August Colgate-Palmolive co.
said it bought three dry food factories for $700 million to support the growth of its Hill’s Pet Nutrition business.
New York-based Jana was founded in 2001 by Barry Rosenstein. It has agitated at other consumer companies, including Whole Foods Market Inc., sold to Amazon.com Inc.
in 2017, and Pinnacle Foods, sold to Conagra Brands Inc.
in 2018. In 2014, it pushed for PetSmart to be sold. The pet supply retailer was sold the following year to a consortium of private equity firms.
Corrections and enhancements
Dwyane Wade is a basketball star. An earlier version of this article incorrectly stated that his first name is Dwayne. (Corrected 22 Sept.)
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