Jana Partners has bought a stake in Whole Foods making the hedge fund that is activist in nature the second-biggest investor of the grocery chain. The intentions of the activist investor are understood to be shaking up the board of directors, overhauling operations and pushing for a sale. Other investors have also pushed for a sale of the company to other retail giants such as Amazon and Kroger Co.
When the news of Jana’s large stake broke, the grocery chain issued a statement that said the company welcomed investors and investments that would place the firm on a path of continued success.
“Whole Foods Market welcomes investment in the company and is open to the views and opinions of all of our shareholders. We value constructive dialogue toward our shared goals of creating shareholder value,” Brooke Buchanan, a spokesperson for Whole Foods, said in a statement.
To assist the hedge fund in achieving its goal, Jana Partners has enlisted several personalities such as former retail executives and even a food author. The information on what Jana Partners intends to do resulted in the share of Whole Foods appreciating by around 10%. This is the biggest that the share has ever rallied in over two years. While the S&P 500 Index has risen by 5.2% since the year begun, the stock of Whole Foods had only appreciated by 1%.
Now holding an 8.3% equity stake in Whole Foods, Jana Partners revealed that it would be holding talks with the management of the grocery chain and push for the company’s strategic alternatives to be reviewed. The hedge fund may also decide to nominate a minimum of three directors who will assist in leading a turnaround of the food retailer. Some of those who have been named as potential nominees on the board include Meredith Adler, a food consultant and an equity analyst, Thomas Dickson, the former chief executive officer of Harris Teeter and Glenn Murphy, formerly of Gap.
Jana Partners has taken an equity position in Whole Foods just when the grocery chain is experiencing the biggest decline in sales in over a decade. Though Whole Foods has been synonymous with organic foods, it has increasingly come under pressure from mainstream supermarkets who are eating away at its market share. Same-store sales for the grocery chain have been in decline for the last six consecutive quarters.
In the wake of the company’s troubles, Whole Foods has indicated intentions to close a couple of its store. And due to criticisms over the high prices of its products, the grocery chain has also said that it was considering lowering prices.