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Jana Partners (Trades, Portfolio) is making bold moves to shake up Lamb Weston (NYSE:LW), the struggling frozen potato titan, and investors are taking notice. After a brutal second quarter that saw the company's stock nosedive 20% and swing to a $36 million loss, Jana isn't holding back. The activist investorholding more than 5% of Lamb Westonhas lined up industry heavyweight Jeff Delapp and other potential board candidates to push for a transformation. With CEO Michael Smith stepping in after what analysts are calling a panicked move, speculation about a potential sale is heating up. Barclays and Jefferies analysts have chimed in, suggesting last week's chaos could be the prelude to strategic shifts or even a buyout.
Lamb Weston's challenges are stacking up like a bad batch of fries. Persistent demand weakness, rising manufacturing costs, and a dip in sales are forcing the company to slash profit and sales forecasts for the year. Jana isn't pulling punches, labeling Smith complicit in what they call the company's operational and strategic debacle. Meanwhile, fast-food price wars are chewing into Lamb Weston's volumes, leaving analysts wondering if the board's decision to promote an insider CEO signals desperation or misplaced confidence. Post Holdings is rumored to be circling the waters, fueling speculation of a major deal on the horizon.
This isn't just corporate dramait's a pivotal moment for Lamb Weston and its investors. With shares down nearly 40% this year, the company's cost-saving plans and leadership overhaul have everything riding on their success. Jana Partners (Trades, Portfolio) is upping the ante, making it clear that business as usual isn't going to cut it. Whether Lamb Weston rebounds or becomes acquisition bait, the next few months could redefine the frozen potato giant's future. For investors, the fry game just got a whole lot more interesting.
This article first appeared on GuruFocus.