US-based activist investor Jana Partners has launched a devastating attack on local pet food company Freshpet.
Jana Partners described the New Jersey firm’s recently announced capital increase plan as “ill-conceived” and “bewildering.”
New York-based Jana Partners, which has a nearly 10% stake in Freshpet, previously asked the company to weigh “strategic value in a sale” to “significantly larger players” in the pet food category. .
Now he has renewed that call, suggesting that Freshpet “requires a significant board change or, in the absence of such a change, should be sold.”
Freshpet announced Tuesday (March 14) that it intends to privately offer US$350 million in convertible senior notes due 2028, which the company will use primarily for “general corporate purposes.”
In reaction to the announcement, Jana Partners issued a statement criticizing the plan.
It said: “We are stunned that Freshpet’s board of directors has chosen to initiate a large equity-linked capital raise in a fragile market reeling from a systemic crisis in the banking system, and with the company’s shares trading at less than 50% of its 52-week high Equally disconcerting is the board’s decision to choose this time to seek a substantially larger capital increase than is immediately needed.
“We are even more perplexed that the board is doing so with an equity-linked security, despite recently assuring investors on multiple occasions that because it believes its shares are too cheap, it would not issue shares.”
Freshpet shares fell as much as 19% yesterday (March 15). Jana suggested that Freshpet’s board of directors had been “caught off guard, not having anticipated the terrible market response to this announcement.”
He added: “This decision is the latest failure by the Freshpet board at a time when it could not afford further damage to its credibility.”
In December, Jana Partners indicated in a regulatory filing that it planned to initiate a proxy fight with the company and run for board seats.
In 2022, Freshpet had a net loss of $59.5 million, up from $29.7 million the year before. However, its fourth-quarter loss narrowed, year-over-year, from $9.3 million to $2.9 million.
Freshpet produces refrigerated pet foods under brands like Freshpet and Dog Joy using natural ingredients. Its products are sold through various channels (mass retail stores, supermarkets and clubs, natural food channels, and pet specialty stores) in the US. It also exports to Canada and Europe and sells online through its website. .
just food asked Freshpet for its response to Jana’s statement, but declined to comment.
