Tourbillon Pushes for Sale of Organic Food Company SunOpta
May 27 2016 - 4:00PM
Dow Jones News
Hedge fund Tourbillon Capital Partners LP is pushing organic
food company SunOpta Inc. to sell itself, according to people
familiar with the matter.
Tourbillon, SunOpta's largest shareholder with a 9.9% stake, is
expected to publicly release 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's increasing its
focus on private-label products, which it believes will create
long-term value for shareholders.
SunOpta shares rose 26% Friday to $4.85.
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.
Rob Copeland contributed to this article
Write to David Benoit at david.benoit@wsj.com
(END) Dow Jones Newswires
May 27, 2016 15:45 ET (19:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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