Trian Partners, an investment management fund of Nelson Peltz, has secured a 7 percent share in Sysco, making it the most heavily invested shareholder in the food service company. The investment of roughly 42 million shares was disclosed on Friday.
Although Sysco has endured some rough years recently in the food industry, Nelson Peltz brings a lengthy resume in the food business to the table for the declining company. He has played significant roles in the likes of Kraft, Pepsi, and Wendy’s. It is not yet clear whether he himself will seek a seat on the Sysco board, although sources indicate that Trian Partners is likely to pursue board representation in some form. The move is a morale boost for several other shareholders, as the Sysco stock traded up about 8 percent following the announcement of Trian’s investment.
Sysco has publicly expressed a spirit of optimism concerning the new involvement of Trian. In a CNBC report, a Sysco representative said, “Sysco welcomes collaborative discussions with investors who share our interest in creating value by marketing and delivering great products to our customers with exceptional service.”
Sysco welcomes collaborative discussions with investors who share our interest in creating value by marketing and delivering great products to our customers with exceptional service.
According to the Wall Street Journal, the rise of smaller specialty distributors and wholesalers to restaurants has been responsible for a significant portion of Sysco’s declining profits. Trian believes it can play a significant role in improving Sysco’s margins, thus putting more money back into the hands of its shareholders.
The Trian securement of a 7 percent stake comes after a failed merger between Sysco and US Foods, resulting in fees of over $300 million for Sysco. The window for board nominations closes next Friday, so shareholders should stay focused on this developing story, given that serious overhaul of the company’s business strategy may be in order. Whether the company is able to turn around may depend upon the moves that are made over the course of this month.
