Freshpet signs cooperation agreement to settle investor dispute
USA- Freshpet, a US pet-food manufacturer, has ended a dispute with one of its largest shareholders Jana Partners following a cooperation settlement in which Freshpet appointed the activist investor’s director nominee to the board.
Timothy McLevish is the investor appointed to Freshpet’s board as part of the agreement.
In June, Jana Partners filed a lawsuit alleging the pet-food company breached its fiduciary duties after instituting governance changes that could impact the investor’s ability to secure board seats.
The agreement resolves this issue and ends a feud with New York-based Jana Partners after the investor disclosed a near 10% stake in Freshpet in September and urged the company to consider a sale.
According to a Freshpet statement, McLevish has served as chief financial officer at five public companies: Kraft Foods Group, Ingersoll-Rand Corp., Carrier Corp., Walgreen Boots Alliance, and Mead Corp.
Along with McLevish, New Jersey-based Freshpet has also appointed Joseph Scalzo, chief executive of Simply Good Foods Co. and WhiteWave Foods, to its board of directors.
In a separate filing with the US Securities and Exchange Commission, Freshpet stated that the cooperation agreement also contains customary mutual non-disparagement provisions.
“Each party’s obligations under the respective non-disparagement provisions of the cooperation agreement will terminate immediately upon any breach by the other party of its non-disparagement obligations,” Freshpet said.
The pet-food maker added that Jana Partners will be subject to customary standstill restrictions, including, among others, “with respect to acquiring beneficial ownership of more than 12.5% of the company’s shares”, proxy solicitation, and related matters, and extraordinary transactions, including a sale of the company.
“We are pleased to reach a constructive agreement with Jana. The Freshpet business has tremendous momentum, and this agreement will help position us to continue delivering the results our shareholders expect,” Billy Cyr, CEO of Freshpet, said in the company’s statement.
McLevish said: “I have long admired Freshpet’s business as it has transformed from a pet-food disruptor to a scaled industry leader.”
Scott Ostfeld, a managing partner at Jana, commended Freshpet for the significant improvements in the business, team, and board it made over the past year.
“Joe Scalzo and Tim McLevish are proven executives with exceptional track records of driving shareholder value, and we are confident that the company is well-positioned to realize its full potential for shareholders. We look forward to supporting Freshpet’s board and management as it executes its compelling growth strategy,” Ostfeld remarked.
Earlier this month, Freshpet reported net sales increased 25.6% to US$183.3m for its second quarter and were up 26.1% year to date at US$350.9m.
Net losses for the quarter narrowed to US$17m from US$20.6m, but for the year so far widened to US$41.7m versus US$38.1m.
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