Boulder Brands Receives Transaction Interest, Exploring Options

Boulder Brands Inc., the natural-foods maker being targeted by activist investor Engaged Capital, said it’s exploring strategic options and has received inquiries from parties interested in “discussing a potential transaction.”

Boulder said in a statement Thursday it has suspended its search for a new chief executive officer and instead retained William Blair & Co. as a financial adviser to assist “with its review of alternatives.”

Engaged, the activist fund founded by Glenn Welling, last month raised its stake in Boulder Brands to about 9.6 percent and had held talks with the company, urging it to explore changes including a possible sale of the whole company or some businesses.

“There can be no assurance that the board’s exploration of strategic or financial alternatives will result in any transaction being entered into or consummated,” Boulder said in the statement. “The company has not set a timetable for completion of this process and does not intend to discuss or disclose developments with respect to this process” until a decision is made.

Boulder’s six brands include vegan-food maker Earth Balance, trans fat-free buttery spread maker Smart Balance, frozen snack seller Evol and gluten-free purveyor Glutino. With a market value of about $520 million, the company may appeal to packaged-food giants seeking healthier offerings.

In June, Boulder Brands cut its earnings forecasts and said co-founder and Chief Executive Officer Stephen Hughes quit. The board named Chief Operating Officer James Leighton interim chief while it searches for a permanent replacement.

On July 8, the company announced it was cutting 15 percent of its salaried employees as part of a restructuring. Boulder aims to funnel most of the cost savings into marketing.

Welling, a former partner at Relational Investors, formed Newport Beach, California-based Engaged Capital with other Relational managers in 2012, backed by Grosvenor Capital Management. The firm has waged successful campaigns at small and mid-sized companies, including juice chain Jamba Inc., television guide data licenser Rovi Corp. and clothing retailer Abercrombie & Fitch Co.

In the past year, a number of companies targeted by Engaged Capital have been sold, including Silicon Image Inc., the creator of HDMI transmission technology, which was bought by Lattice Semiconductor Corp. Fiber-optic supplier Oplink Communications Inc. was sold to Koch Industries Inc., to be managed by Koch’s Molex unit, and diagnostic-equipment maker Volcano Corp. was acquired by Royal Philips NV. Procera Networks Inc. was taken private by Francisco Partners Management.

Activist funds generally acquire equity stakes in public companies and seek to force changes that boost shareholder returns.

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