Jana ratchets up pressure on Freshpet, recruits Schmidt to campaign

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By Svea Herbst-Bayliss

NEW YORK (Reuters) - The activist investor pushing Freshpet (NASDAQ:FRPT) Inc to consider selling itself is ratcheting up the pressure on the pet-food company by recruiting industry expert Kurt Schmidt to help with its campaign and possibly serve as director candidate, people familiar with the matter said.

Jana Partners LLC, which reported owning a 9.9% stake in September, recently added Schmidt to a group of advisers that also includes a former Kraft Foods (NASDAQ:KHC) chief financial officer and a former chief executive officer at Jarden Corp, said the sources, who were not permitted to speak publicly on the private matter.

The move comes at a time of significant interest in acquisitions in the sector and after Freshpet has hired Bank of America (NYSE:BAC) to explore strategic alternatives, including a possible sale, two people familiar with the hiring said.

A representative of Freshpet declined to comment and a representative of Bank of America did not immediately respond to a request for comment.

Schmidt is a former chief executive officer of premium pet food brand Blue Buffalo which was purchased by General Mills Inc (NYSE:GIS) in 2017. Schmidt currently serves as a director at Campbell Soup (NYSE:CPB) Co, having joined the board in 2018 as part of a settlement with hedge fund Third Point LLC.

At Campbell Soup, Schmidt helped the company hire a new chief executive officer and has helped oversee other changes to the company's portfolio.

Jana Partners wants Freshpet to consider operational changes and improve how it allocates capital in addition to exploring a sale but it has not said whether it plans to nominate director candidates in a potential proxy fight.

The activist firm is stepping up its pressure on the company only a few weeks after Mars announced the purchase of Champion Petfoods, a sale that left Freshpet as the only large independent pet food business in North America. The sales process for Champion Petfoods was highly competitive and attracted significant strategic interest, two sources said.

The last two years have been a roller coaster for Freshpet. In 2021, the stock price hit a record high of $185 only to plunge 79% to under $39 a share in September 2022 after a series of earnings misses, operational miscues and the departure of its chief financial officer in September. The company named a new chief financial officer in November.

Freshpet's stock price has surged more than 50% since Jana made a regulatory filing announcing its stake in the company. In the past the hedge fund, run by Barry Rosenstein, has pushed for changes at Whole Foods Market, which sold itself to Amazon.com Inc (NASDAQ:AMZN) in 2017, and Pinnacle Foods, which was sold to Conagra Brands (NYSE:CAG) in 2018.