Jana Partners Goes Activist On ConAgra Foods

Jana Partners goes activist on ConAgra with a 7.2% stake, cites underperformance and says the integration process from the 2013 Ralcorp acquisition relatively disastrous. Already planning a proxy battle with nominees. ConAgra has been speculated as an activist target for years.

Here’s the crux of Jana’s argument:

JANA believes shares are undervalued. ConAgra has significantly underperformed in shareholder value creation. Most significantly, the acquisition of Ralcorp Inc. in January 2013, which has been followed by disappointing performance for shareholders, repeated guidance misses, negative revisions to long term earnings targets, no dividend per share growth, and operating performance challenges.

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Issues with this acquisition led to the Issuer taking a $1.3 billion impairment on March 26, 2015, after which JANA began purchasing the Shares and analyzing opportunities for improved shareholder value creation. JANA believes that in the period since the Ralcorp acquisition, the Board has failed to adequately address the shareholder value destruction and persistent underperformance that followed the Ralcorp acquisition.

JANA is prepared, if necessary, to nominate four directors for the board, Barry Rosenstein include. The opportunities for shareholder value creation, including: undertaking a strategic review of the ConAgra’s strategy and corporate structure to determine if its businesses are optimally positioned to succeed, as well as various potential alternative transactions and structures; addressing the ConAgra’s operational performance and cost structure; and optimizing its capital allocation policies and capital structure.

JANA did request that ConAgra delay the June 21, 2015, deadline to submit notice of stockholder nominations for the 2015 annual meeting to get a chance to have collaborative discussions.

Edit: ConAgra extends the deadline for shareholder nominations for the board from June 21 to July 8. Says looking forward to opening discussions with Jana Partners after the June 30th 4Q earnings announcement.