Shares of food service corporation Sysco has taken a good jump after Nelson Peltz's Trian Partners agreed on Friday to purchase its more than a 7 percent stake. It traded 8 percent above compared to that of Thursday's.
"We have recently engaged with Trian and expect to continue a constructive dialogue," confirmed Sysco yesterday in a prepared statement delivered through e-mail.
This, of course, is in reference to their open discussions with new investors who have shared interest in "creating value by marketing and delivering great products to our customers with exceptional service," as described in a press statement.
If believed to a report of CNBC, Trian will be taking about 42 million shares of Sysco and that is worth around $ 1.6 billion.
Now, shares for Sysco over the past five years have only been up 8 percent every year compared with 12 percent for all food distribution companies as well as 16.5 percent in the S & P 500 index, as described by Morningstar analysts.
Sysco, then, also says that while they are piecing together a new strategy for the future, they know that it has to involve—like so with so many other companies—the cutting of costs.
"Despite having a number of competitive advantages, [Sysco's] operating and financial performance has underperformed relative to its potential, and…it should adopt strategic and operating initiatives to improve operating margins, enhance working capital efficiency, consider the use of prudent amounts of incremental leverage to increase the amount of capital returned to shareholders, and take steps to better align management compensation with corporate performance", Trian wrote in the administrative filing.
They go on to say, "We believe Sysco is extremely well positioned to execute our strategy in a manner that will support the success of our customers, profitably grow our business and improve our return on invested capital. As we noted in our most recent earnings announcement, we look forward to providing additional details regarding our strategic initiatives during our Investor Day on September 15, 2015."
Earlier this year Sysco had also tried merging with US Foods. However, the effort failed as regulators blocked it. The deal was finally dropped in June though the planning of collaboration was there for more than a year and a half.
Meanwhile, under the umbrella of today's good news the investors still need to wait and watch the company's fate this time until board nominations are done.
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