Jana Partners Urges Lamb Weston to Improve or Sell

By Svea Herbst-Bayliss
NEW YORK (Reuters) – Activist investor Jana Partners urged Lamb Weston on Monday to replace board members and top executives to enhance its performance or consider a sale.

"Lamb Weston’s Board and management have wasted the chance to sustain and grow shareholder value in a high-quality business," wrote the hedge fund's managing partner Scott Ostfeld in a letter to the board. "There is urgent need – and strong desire – for significant Board and leadership change at Lamb Weston," the letter continued.

If the board is unwilling to make "significant changes needed to repair Lamb Weston," it should consider putting itself up for sale while strategic buyers are interested, the letter asserts.

Lamb Weston did not immediately respond to a request for comment.

Jana owns more than 5% of the approximately $11 billion company, expressing in October a desire for improvements in operations and capital allocation, possibly leading to a sale.

In Monday's correspondence, Jana highlighted that Wall Street reacted positively to its involvement, boosting the company's value by roughly $1 billion.

Holding company Continental Grain is collaborating with Jana on this investment, and they have identified several industry executives, including former Lamb Weston executive chairman Timothy McLevish, as potential board candidates.

The letter pointed out financial and operational deficiencies that have cost Lamb Weston nearly $400 million in EBITDA over the last 2-1/2 years. Increased spending curtailed free cash flow and undermined confidence.

Jana also criticized the "questionable use and disclosure practices" related to the company’s aircraft, particularly noting frequent flights between its headquarters in Boise, Idaho, and Omaha, Nebraska, about 1,000 miles apart. The letter suggested that Omaha might serve as the CEO's primary residence.