Lamb Weston Stock Jumps As Activist Investor Jana Partners Reportedly Acquires Stake: Retail Stays Wary

Shares of french-fry maker Lamb Weston Holdings (LW) jumped over 7% on Friday morning after The Wall Street Journal reported that activist investor Jana Partners has acquired about 5% stake in the firm.

The report stated that Jana Partners plans to nudge Lamb Weston to consider a sale as well as improve its operations and capital allocation strategy.

Following the stake purchase, the activist investor is likely to nominate directors to the firm’s board, for which it is working with industry executives including Lamb Weston’s former executive chairman Timothy McLevish. Jana reportedly believes Lamb Weston could be a takeover target for large food companies.

The WSJ report added that apart from McLevish, the persons who could be nominated to Lamb Weston’s board include Joseph Scalzo, former chief executive officer of Simply Good Foods; Diane Dietz, former chief marketing officer of Safeway; Brad Alford, former CEO of Nestlé USA; and John Gainor, former CEO of International Dairy Queen.

Lamb Weston had earlier implemented a restructuring plan to drive operational and cost efficiencies and improve cash flows. The plan included The permanent closure of the company’s manufacturing facility in Connell, Washington and the temporary curtailment of certain production lines and schedules across its manufacturing network in North America.

The firm had also announced the reduction of approximately 4% of its global workforce as well as elimination of unfilled job positions. The announcement aligned with food chains and related firms facing tight spends by consumers against the backdrop of high inflation.

Lamb Weston estimates that the restructuring plan will generate approximately $55 million in pre-tax cost savings and a reduction in working capital in fiscal 2025.

Despite the report and the stock price movement, retail investors on Stocktwits are remaining on the sidelines, with the sentiment meter trending in the ‘neutral’ zone.

Notably, shares of the firm are down over 28% on a year-to-date basis.

Also See: United States Cellular Stock Jumps 10% After Spectrum Deal With Verizon: Retail Cheers On

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