ConAgra Foods rose the most in more than 25 years after the food company was targeted by activist investor Jana Partners, which is looking to shake up the board following a disappointing acquisition of Ralcorp Holdings.
The stock rose 11 per cent to $43.37 in New York, the biggest one-day gain since October 1989. ConAgra shares have climbed 20 per cent this year.
Jana, a hedge fund founded by Barry Rosenstein, disclosed a new active stake of about 7.2 per cent in ConAgra on Thursday and threatened to nominate three directors. It also asked the company to push back its 21 June deadline for board nominations -- a concession Jana has already won. Shortly after Jana’s filing, ConAgra extended that deadline to 8 July.
ConAgra’s $6.7 billion purchase of Ralcorp in 2013 “has been followed by disappointing performance for stockholders, repeated guidance misses, negative revisions to long-term earnings targets, no dividend per share growth, and operating performance challenges,” Jana said in the filing. The hedge fund said it began amassing its stake after ConAgra wrote down the deal by $1.3 billion in March.
Jana is calling on ConAgra to embark on a review of strategy and corporate structure, examine its operational performance and costs, and better manage the way it allocates capital.
“We welcome shareholder engagement,” ConAgra said in a statement. “We look forward to opening discussions with Jana Partners” after ConAgra’s fourth-quarter earnings release on 30 June.
Bloomberg News, edited by ESM
