February 15, 2022
BOSTON (Reuters) – Investment firm Sachem Head Capital Management is trying to take control of US Foods Holding Corp’s board and has nominated seven directors, arguing the food distributor has been lagging its peers.
Sachem Head, which owns 8.7% of the company, said the nominations are “the last option available to us to protect the interests of our fellow stockholders.” It said US Foods has failed to make operational improvements and lift margins.
In a letter to other shareholders, Sachem Head’s portfolio manager, Scott Ferguson, wrote that new board directors are needed to hold current or future management accountable.
“There is a deep-seated resistance to real change at US Foods, and, in fact, a lack of acknowledgement that there is even a problem,” the letter said.
He nominated himself and six others with expertise in supply chain issues, the food industry, and strategic and financial issues to the company’s 11-member board. The slate includes Bernardo Hees, who previously served as chief executive of The Kraft Heinz Company.
Sachem Head earlier walked away from a proposed settlement that would have handed it one board seat and allowed it to help select another director. The hedge fund has been invested in US Foods Holdings since 2018.
The company, valued at $8.3 billion, last week said it split the role of chairman and chief executive officer, taking a step that often appeals to big investors like pension funds who would eventually vote in proxy fights.
Private equity firm KKR owns a roughly 10% chunk of the company and has a board seat after having made an investment.
(Reporting by Svea Herbst-Bayliss: Editing by Michael Urquhart)