Activist shareholder Starboard Value has quietly built a significant stake in frozen-food manufacturer Lamb Weston Holdings Inc (NYSE:LW) and is urging the company to take steps to support its stock, the Wall Street Journal reported, citing people familiar with the situation. While sources say the precise size of the stake is not known, Starboard has become one of the largest holders of the company.
People familiar with Starboard's moves say the firm has been an investor in Lamb Weston for some time and recently increased its position after concluding the business appeared undervalued. The report indicates Starboard is calling for operational improvements and cost-cutting measures designed to help lift the company's share price.
Lamb Weston had a market capitalization of about $6.5 billion as of Friday. Over the past 12 months the company's stock has declined by more than 10%, a period in which the business contended with several headwinds that the report identifies as contributors to softer demand and profit pressure.
The company is grappling with tightening margins and impaired profitability as it deploys steep discounts to regain customers, the report notes. Concurrently, global manufacturing costs climbed markedly over the past year, a rise the report attributes in part to higher U.S. trade tariffs.
Among the specific strategic changes Starboard is said to favor is a sale of Lamb Weston's Asia Pacific operations. The report presents that recommendation as part of the activist's effort to refocus the company's asset base and improve returns.
Context and implications
The information available in the report highlights investor concern about Lamb Weston's recent performance and cost structure. Starboard's calls for cost reductions and an asset sale underscore pressure on the company to address margin erosion and to consider portfolio changes. The exact details of Starboard's stake were not disclosed, and the company has not publicly confirmed any specific responses to the investor's recommendations in the report.
This account is based on people familiar with the matter as cited in the report and does not add new financial figures beyond those reported.