SunOpta draws private equity interest, second activist emerges: sources

Mon Jul 25, 2016 3:08pm EDT
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By John Tilak and Lauren Hirsch

(Reuters) - Canadian organic food company SunOpta Inc (SOY.TO: Quote), already under pressure from U.S. hedge fund Tourbillon Capital Partners LP, is being prodded by a second activist shareholder to explore the sale of all or part of the company, according to sources familiar with the matter.

Canadian hedge fund West Face Capital, which pushed SNC-Lavalin (SNC.TO: Quote) to sell its AltaLink business for about C$3.1 billion in 2014, also wants SunOpta to look at board or management changes if sales don't materialize, said the sources who spoke on condition of anonymity.

West Face's move comes as SunOpta, whose brands include Nature's Finest and Sunrich Naturals, has received interest from private equity firms, said two sources familiar with the situation.

While some of Toronto-based West Face's demands are similar to Tourbillon's, the two hedge funds are not acting in concert, the sources said.

West Face, SunOpta's third biggest shareholder with a more than 8 percent stake, began the push about a year ago but has kept it private, one source said. Tourbillon, SunOpta's largest stakeholder, went public with a May 27 letter to the board and chief executive officer.

SunOpta and West Face declined to comment.

Investors have been disappointed with SunOpta's share price, which is down nearly 48 percent over the past year. Some shareholders are concerned about the debt level, the integration of acquisitions and SunOpta's sluggish performance in the high-growth organic foods market, the sources said.

After the Reuters report, SunOpta shares shot up as much as 6.3 percent to C$7.10 before easing to C$6.92. Before the report, the stock was down about 2 percent.   Continued...