Food Supplier SunOpta Hires Rothschild for Strategic Review

  • Move comes after activist urged company to explore sale
  • ‘Now is not the right time’ for outright sale, SunOpta says

SunOpta Inc., a Canadian supplier of organic and specialty foods, has hired Rothschild Inc. to review its operations after an activist shareholder urged the company’s board to explore a sale.

Rothschild, supported by legal advisers Davies Ward Phillips & Vineberg, will evaluate a complete range of strategic and financial actions that could be undertaken to maximize shareholder value, SunOpta said in a statement on Monday.

The moves comes one month after Tourbillon Capital Partners, the largest shareholder with a 9.9 percent stake, sent a letter to SunOpta’s board urging it to “immediately engage an independent investment bank to advise on a value maximization process -- including the execution of a sales process.” Tourbillon cited the company’s poor share-price performance in the past two years and said the food supplier has a uniquely attractive business in the growing area of sourcing hard-to-find organic and non-genetically modified ingredients.

The Brampton, Ontario-based company hired Rothschild after recent discussions among management, board members and many of the company’s largest shareholders, including Tourbillon. They concluded that “now is not the right time to commence an outright sale of the company,” SunOpta said in the statement.

There is no deadline for the completion of the review. The company doesn’t plan to comment until the board of directors approves a plan or concludes the process.

Shares Drop

On Monday, SunOpta fell 1.3 percent to close at $5.34 in New York, after touching the lowest price in a month.

The company also said Monday oversight of quality assurance has been transferred from the company’s operations department to Jim Gratzek, Senior Vice President, Research and Development. He will also continue to lead SunOpta’s research and development. In May, SunOpta voluntarily recalled some sunflower-kernel products that had the potential to be contaminated with Listeria monocytogenes.

“The same disciplined, focused approach which Jim has employed so successfully in our R&D function will help us to more rapidly address the process challenges at the root of our recent quality issues,” Chief Executive Officer Rik Jacobs said in the statement.

SunOpta sells a range of products from non-genetically modified soybeans to Nature’s Finest organic juice. The company last year completed its biggest-ever acquisition, purchasing frozen-fruit producer Sunrise Holdings Inc. for $444 million. The shares have tumbled by more than half since the transaction was announced.

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