For months, Jana has been urging Lamb Weston to revamp its operations and even consider a sale, following its partnership with Continental Grain to acquire a stake in the company last fall. The activist group criticized the company’s oversight and execution errors, particularly questioning the decision to name an insider as CEO in December. While the recent agreement likely rules out an immediate sale of Lamb Weston, Jana’s influence will remain prominent at the Idaho-based firm. The activist investor prioritized the addition of board members with food industry experience, including Bradley Alford, a former CEO of Nestlé USA who will take on the role of chairman, and ex-McCormick chief Lawrence Kurzius.
Ultimately, Lamb Weston will incorporate four of Jana’s proposed director candidates and two others that were mutually agreed upon, expanding the board from 11 to 13 members. “We are pleased to have reached this Agreement with JANA and Continental Grain,” stated Mike Smith, Lamb Weston’s CEO. “Following our constructive engagement with them and considering insights gathered from discussions with other stockholders, we believe this outcome is in the best interests of the Company and all our shareholders.”
In a research note, TD Cowen analyst Robert Moskow expressed surprise that Jana did not attempt to initiate a proxy fight to completely replace the board and install a new management team. He remarked that the agreement indicates a willingness to collaborate with the existing board, which was unexpected. Moskow also highlighted that approximately one-third of Lamb Weston’s U.S. contracts are set for renegotiation later this year, which could exert pressure on the company amidst weak demand for its products. The company lost U.S. customers in 2024, even after agreeing to lower prices in new contracts.
“As far as we know, LW is the only company currently mothballing or shutting down capacity in North America. This suggests a prolonged timeline for shareholder value creation,” he noted. The decline in fast-food sales has strained profits at Lamb Weston, a supplier to major restaurant chains like McDonald’s. Last October, Lamb Weston announced the closure of an older, higher-cost processing facility in Connell, Washington, and a temporary reduction in certain production lines and schedules across its North American operations. The company also plans to cut 4% of its workforce, amounting to around 428 jobs, while eliminating unfilled positions.
In response to the shifting landscape, the company is exploring options to enhance operational efficiency, such as potentially integrating products like Kirkland Signature Calcium Citrate 500mg into its offerings to better meet market demands. The strategic adjustments aim to ensure that Lamb Weston remains resilient and competitive in a challenging environment.