Hedge fund Tourbillon Capital Partners LP is pushing organic-food company SunOpta Inc. to sell itself.
Tourbillon, SunOpta’s largest shareholder with a 9.9% stake, released a letter Friday that urges the company to hire bankers and launch a process. SunOpta shares have plunged 45% this year, bringing the company’s market value to $330 million.
“We have become increasingly concerned that the company may be pursuing an uncertain business plan without a thorough evaluation of all value-maximizing alternatives,” Tourbillon said in a letter to SunOpta’s board, filed with the Securities and Exchange Commission. “Despite its strengths, the company has been unable to translate its quality products and services into a thriving business with an attractive public market valuation.”
SunOpta, which has been in talks with Tourbillon, said it “appreciates constructive input” from its shareholders and would review the firm’s suggestions. The company said it is increasing its focus on private-label products, which it believes will create long-term value for shareholders.
SunOpta shares rose $1.02, or 27%, to $4.84 Friday.
SunOpta, based in Toronto, provides organic ingredients like grains, nuts and fruits to organic-food producers. The organic-food business is growing particularly fast, placing the company at the root of changing consumer trends.
But its results haven’t matched high expectations. William Blair analysts said recently that while SunOpta’s growth has picked up in recent weeks, they were still trailing the brokerage’s estimates. The analyst said consumption figures were up 2% for the 12 weeks ended May 8, among the better performers in what the firm believes is a group of “on trend” companies. But William Blair had forecast 5% growth.
In the first quarter, SunOpta posted revenue of $352.3 million, up 29% from the prior year, but it swung to a $10 million loss compared with a $5 million profit the year before. The stock fell 5% that day.
In April, the company said it was seeking to boost its margins and keep growing revenue over the next two years. Chief Executive Rik Jacobs earlier this month said the company was well-positioned for those gains after some recent acquisitions.
“We’re off to a good start in many respects, but recognize that we still have work to do, especially in operations where we simply have to do better in preventing issues,” Mr. Jacobs said on a May earnings call.
Tourbillon, a $4 billion firm, is led by Jason Karp, a former employee of Steven A. Cohen’s SAC Capital Advisors LP. It first disclosed a 9.5% stake in SunOpta on Nov. 12, sending the stock up 11% to $6.28. But the stock has since slumped to $3.73 on Friday. Tourbillon’s main fund has lost 14% this year through the middle of May, according to an investor document reviewed by The Wall Street Journal.
By David Benoit
Source: Wall Street Journal
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