The shares of ConAgra Foods (NYSE: CAG) climbed more than 11% to $43.37 per share on Friday. Jana Partners disclosed a huge stake in the company.
Jana Partners reported in its 13D filing with the Securities and Exchange Commission (SEC) that it acquired 30,863,322 shares including options to buy 19,032,000 shares of ConAgra Foods. The activist hedge fund’s stockholding represents 7.2% of the outstanding shares of the company.
ConAgra Foods is an attractive investment opportunity
Jana Partners is now the second largest shareholder of ConAgra Foods. The activist hedge fund invested in ConAgra Foods because of its belief that the company represents an attractive investment opportunity.
The activist hedge fund noted that ConAgra Foods “significantly underperformed in shareholder value creation. Jana Partners said the acquisition of Ralcorp was the most significant strategic decision of the board of directors of the company. However, it was followed by a disappointing performance for shareholders, earnings guidance misses, negative revisions to long-term earnings target, no dividend growth, and operating performance challenges.
According to Jana Partners, the issues related to the acquisition led ConAgra to record an impairment of $1.3 billion on March 26, 2015. Jana Partners started acquiring shares of the company after following the situation. The activist hedge fund also began analyzing opportunities to improve the creation of value for shareholders,
Jana Partners believes that the board of directors of ConAgra Foods failed to address the shareholder value destruction and persistent underperformance of the company since acquiring Ralcorp.
Jana Partners to nominate directors to the board of ConAgra
The activist hedge fund indicated its intention to nominate three executives to the board of directors of ConAgra Foods including Brad Alford, former CEO of Nestle; James Lawrence, former chairman of Rothschild North America, and Barry Rosenstein, managing partner of Jana Partners.
According to Jana Partners, it potential nominees possess the necessary expertise, experience and focus to help CongAra evaluate and address opportunities to create value for shareholders.
The activist hedge fund said its nominees could help the company conduct strategic reviews on its corporate structure, determine if its businesses are optimally positioned to succeed, and evaluate potential alternative transactions among others.
Jana Partners requested the board of directors of ConAgra to delay the June 21 deadline for the submission of a notice of stockholder nominations for the 2015 annual meeting.