U.S. activist investor Engaged Capital reported a 7.5 percent stake in SunOpta Inc (SOY.TO) on Thursday and said it had signed a confidentiality agreement with the Canadian organic food company to provide strategic advice.
The move comes as SunOpta faces increasing activist shareholder pressure, with Engaged becoming the third hedge fund to target the company this year. Shares of SunOpta were up 5.5 percent at $9.07 in mid-day trading.
U.S. hedge fund Tourbillon Capital pressured SunOpta to explore a sale earlier this year. In July, Reuters reported that Canadian hedge fund West Face Capital had a stake and could push for board and management changes should a sale fail to materialize.
SunOpta spokesman Dan Gagnier said Engaged had been a shareholder in the company off and on over the last few years. The company has entered into an agreement to seek the hedge fund’s advice during a strategic review process, he added.
“We look forward to a constructive dialogue with Engaged, as we do all shareholders, as we work to complete our process,” Gagnier said.
Engaged is looking at a number of possible moves for SunOpta, a person familiar with the situation said. They include partnering with a strategic player, bringing in new talent, improving operations and making changes to the board and management.
Selling the company is one of the options, but the fund wants to address the operational issues before considering that, the source said.
The source said Engaged became involved after what it considers poorly timed and integrated acquisitions, quality issues and recalls.
The hedge fund has activist experience in specialty foods as it acquired a stake in Boulder Brands, which was eventually sold to Pinnacle Foods Inc (PF.N).
Update: Reuters previously reported that SunOpta has received interest from private equity firms.
(Reporting by Michael Flaherty and John Tilak; Editing by Jeffrey Benkoe and Lisa Von Ahn)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of SunOpta Inc