Lamb Weston has drawn the attention of another activist investor as Starboard Value advocates for a potential sale of the potato-product supplier’s international assets.
In a letter to Lamb Weston’s management, the New York-based Starboard announced it has accumulated a “significant” shareholding and is urging the company’s executives to accelerate their transformation initiatives.
Starboard has recommended that Lamb Weston undertake a strategic review of its overseas assets as one of several suggestions, including the possible divestiture of select operations within the APAC region.
Since going public through an IPO in 2016, Lamb Weston has faced scrutiny from multiple investors. Another activist, Jana Partners, emerged in 2024, claiming that the company’s shares were “undervalued” and represent an “attractive investment opportunity.” However, Jana also criticized the previous management for a series of missteps that led to poor performance for shareholders.
In response to these concerns, a new CEO, Michael Smith, was appointed in early 2025 after being promoted from COO. Jana Partners expressed dissatisfaction with this choice and called for the sale of the company as a viable option. Additionally, board changes were made in summer 2025 at the behest of Jana Partners, followed by the rollout of a $250 million cost-savings program.
On March 8, Starboard stated that Lamb Weston is now “well positioned to deliver meaningfully greater shareholder value” but pressed Smith to “double” the cost-savings target and enhance margins. The letter noted that, since the IPO, most of the company’s revenue growth has been driven by price rather than volume. Consequently, Starboard expects Lamb Weston to leverage its operations more effectively.
Starboard proposed increasing the cost-savings goal to $500 million by 2028, suggesting that such a target would bring adjusted SG&A down to approximately 4.5% of net sales, a more suitable level for the business model and customer mix. They also pointed out that, despite this target, Lamb Weston’s SG&A intensity would still exceed that of certain foodservice-focused peers, such as Tyson Foods and Pilgrim’s Pride.
Notably, Starboard indicated that Lamb Weston’s APAC assets have faced competitive pressures that have negatively impacted profitability, thus acting as an “unnecessary distraction” during the turnaround process. The letter emphasized that a thorough assessment of these operations could sharpen capital allocation, enhance consolidated margins, and unlock additional value. It also noted that while the APAC operations generate minimal earnings, local players would likely show substantial interest should the company decide to divest.
Starboard urged Lamb Weston, which counts McDonald’s among its key customers, to set a medium-term EBITDA margin target of 25%. This approach, rather than focusing solely on cost reductions, would provide enhanced transparency and accountability.
Addressing Smith directly, the letter remarked: “While we are pleased with the progress to date, we believe there is much more to be accomplished and are excited to be able to get involved at this valuation. We look forward to working with you and the board as you focus on accomplishing and surpassing this margin target.”
Just Food reached out to Lamb Weston for a statement. A spokesperson replied, “Lamb Weston values ongoing and constructive dialogue with its shareholders and appreciates productive feedback to drive long-term shareholder value. The board and management are acting with urgency and have taken significant steps to position Lamb Weston for long-term success in a dynamic marketplace.”
This situation reflects broader trends within the food and beverage industry, where companies are increasingly under pressure to maximize shareholder value and adapt to evolving consumer preferences. In this context, monitoring food and drink consumer trends is vital for any business operating in this space.