Lamb Weston has come on the radar of another activist investor as Starboard Value presses for the potential sale of the potato-product supplier’s international assets.
In a letter sent to US-based Lamb Weston’s management, New York-headquartered Starboard said it has built a “significant” shareholding in the company and is urging executives to speed up its transformation initiatives.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
The private-equity firm has suggested Lamb Weston launch a strategic review of its overseas assets as just one of a number of recommendations, including the possible sale of “select” parts of its operations in the APAC region.
New York-listed Lamb Weston went public through an IPO in 2016. Another activist investor, Jana Partners, came on the scene in 2024 and said the company’s shares were “undervalued” but represented an “attractive investment opportunity”.
However, Jana Partners criticised Lamb Weston’s then management for a “litany of self-inflicted missteps that have led to underperformance for shareholders”.
A new CEO was then appointed from the start of 2025 in the form of Michael Smith, elevated up the chain from COO. Jana Partners was unhappy with the appointment and pressed for the sale of the company as an option.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataBoard changes were then made last summer at the behest of the activist followed by the launch of a $250m cost-savings programme.
Starboard said yesterday (8 March) that Lamb Weston is now “well positioned to deliver meaningfully greater shareholder value” but urged Smith to “double” the cost-savings and increase margins.
“Most of the company’s revenue growth since IPO has been price-driven, as opposed to volume-driven,” the investor said in the letter. “Therefore, we would expect Lamb Weston to have realised significant operating leverage. You have not. It is time to catch up.”
By increasing the cost-savings target to $500m by 2028, Starboard said such a level would “bring adjusted SG&A to approximately 4.5% of net sales, which we believe is more appropriate for the company’s business model and customer mix”.
It added: “Notably, even at that level, Lamb Weston’s SG&A intensity would remain above that of certain foodservice-focused peers, including Tyson Foods and Pilgrim’s Pride.”
Starboard said Lamb Weston’s APAC assets have come under pressure from competition and have “weighed” on the group’s profitability, causing an “unnecessary distraction to the turnaround”.
The letter continued: “We believe a deliberate assessment of these operations will sharpen capital allocation, improve consolidated margins, and unlock additional value.
“Importantly, our diligence suggests the company’s APAC operations generate little in terms of earnings, but there would be considerable interest from local players should the company seek to divest its operations.”
The investor urged Lamb Weston, which counts McDonald’s as a key customer, to implement a 25% EBITDA medium-term margin target, which, rather than a cost-reduction goal, “provides greater transparency and accountability”.
Addressing Smith directly, the letter noted: “While we are pleased with the progress to date, we believe there is much more to be accomplished and are excited to be able to get involved at this valuation.
“We look forward to working with you and the board as you focus on accomplishing and surpassing this margin target.”
Just Food asked Lamb Weston for comment.
A spokesperson responded: “Lamb Weston values ongoing and constructive dialogue with its shareholders and appreciates productive feedback to drive long-term shareholder value.
“The board and management are acting with urgency and have taken significant steps to position Lamb Weston for long-term success in a dynamic marketplace.”
