Jana Partners signs sixth executive as it pushes for changes at Lam Weston

By Svea Herbst-Bayliss

NEW YORK (Reuters) – Yana Partners is working with a sixth executive to push for changes at Lamb Weston, which the activist investor may seek to replace most of the French roaster’s board, according to a regulatory filing on Friday.

Potato industry veteran Jeff DeLapp, previously president of Lamb Weston and then president of Cow Weston competitor McCain Foods North America, joins the fund’s lineup of potential board candidates.

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

Last week, disappointing Lam Weston earnings sent the stock price plunging as much as 20 percent. Weston’s shares are down 39 percent since January’s bull run. The company made an unexpected CEO change when it said it was replacing CEO Tom Werner with Chief Operating Officer Michael Smith. “The appointment represents the culmination of a thoughtful, year-long planning process,” he said.

Lam Weston said it swung to a $36 million loss in the second quarter after declining sales and blamed softer demand and higher manufacturing costs. He lowered his earnings outlook for the full year.

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

Wall Street analysts interpreted last week’s news to indicate a growing opportunity for a Weston transaction. Jefferies analyst Rob Dickerson wrote that the CEO change “appears to be a panic move.” Barclay (LON: ) analyst Andrew Lazar wrote that last week’s guidance and stock movement “could make future strategic changes even more likely.” Reuters reported earlier this month Postal Holdings (NYSE: ) is working with bankers on a possible Lam Weston deal.

Yana, who often works with strategic and operating partners, said in an earlier filing that he was working with Continental Grains and that a number of executives, including former Lamb Weston executive Timothy McLeavy, were potential candidates.

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