US-based activist investor Jana Partners has launched a blistering attack on local pet-food firm Freshpet.

Jana Partners described the loss-making New Jersey firm’s newly-announced capital-raise plan as “ill-conceived” and “baffling”.

New York-based Jana Partners, which holds a near-10% stake in Freshpet, has previously called on the company to weigh up the “strategic value in a sale” to potentially “significantly larger players” in the pet-food category.

Now it has renewed that call, suggesting Freshpet “requires either significant board change or, in the absence of such change, should be sold”.

Freshpet announced on Tuesday (14 March) it intends to offer privately US$350m of convertible senior notes due 2028, which the company will mainly use for “general corporate purposes”.

Reacting to the announcement, Jana Partners issued a statement criticising the plan.

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It said: “We are astonished that Freshpet’s board has elected to initiate a large equity-linked capital raise in a fragile market reeling from a systemic crisis in the banking system, and with the company’s shares trading at less than 50% of their 52-week high. Equally baffling is the board’s decision to choose this moment to pursue a substantially larger capital raise than immediately needed.

“We are further perplexed that the board is doing so with an equity-linked security, despite recently assuring investors on multiple occasions that – because it believes their stock is too cheap – it would not issue equity.”

Shares of Freshpet fell as much as 19% yesterday (15 March). Jana suggested the Freshpet board had been “caught flat-footed, having failed to anticipate the terrible market response to this announcement”.

It added: “This decision is the latest failure by Freshpet’s board at a time when it could ill afford further damage to its credibility.”

In December, Jana Partners indicated in a regulatory filing it planned to launch a proxy fight with the company and run for board seats.

In 2022, Freshpet made a net loss of $59.5m, up from $29.7m the previous year. However, its Q4 losses narrowed, year-on-year, from $9.3m to $2.9m.

Freshpet produces chilled pet-food under brand names such as Freshpet and Dog Joy using natural ingredients. Its products are sold through various channels – mass retail, grocery and club stores, natural food channels and specialist pet outlets – in the US. It also exports to Canada and Europe and sells online via its website.

Just Food asked Freshpet for its response to Jana’s statement but it declined to comment.