Jana Partners signs up sixth executive as it pushes for changes at Lamb Weston, filing shows By Reuters

By Svea Herbst-Baylis

NEW YORK (Reuters) – Jana Partners is working with a sixth executive to shake up Lamb Weston, signaling an activist investor may seek to replace the majority of the French fry maker’s board, according to a regulatory filing on Friday.

Potato industry veteran Jeff Delap, who previously served as president of Lamb Weston and then as president of Lamb Weston rival McCain Foods, North America, joined the ranks of fund executives who could become board nominees.

Jana Partners owns more than 5% of Lamb Weston and is pushing the company to improve operations and capital allocation or put itself up for sale.

Last week, Lamb Weston’s disappointing earnings sent its share price down 39% since January Tom Werner with chief operating officer Michael Smith said the appointment “represents the culmination of a thoughtful, year-long succession planning process.”

Lamb Weston said it posted a $36 million loss in its fiscal second quarter after falling sales and blamed softer demand and higher production costs.It cut its full-year revenue forecast.

Jana is now stepping up pressure on the board, calling last week’s earnings a “disaster” and saying Smith, as part of the executive team, was “complicit in (Lamb Weston’s) wide-ranging operational and strategic failure”.

Wall Street analysts commented on last week’s news, suggesting that the chances of a Lamb Weston deal were increasing. Jefferies analyst Rob Dickerson wrote that the CEO change “looks like panic” and Barclays ( LON: ) analyst Andrew Lazar wrote that last week’s guidance and stock move “may make future strategic changes more likely,” Reuters reported earlier this month Post Holdings (NYSE:) is working with bankers on a possible deal for Lamb Weston.

Jana, which often collaborates with strategic and operational partners, said in an earlier statement that it was working with Continental Grain and that several executives, including former Lamb Weston executive chairman Timothy McLevis, can be candidates.

Lamb Weston’s last annual meeting was held in September.