By Annie Gasparro And Maureen Farrell
Trian Fund Management LP on Friday disclosed a 7% stake in Sysco
Corp. and said it wants a seat on the food distributor's board,
claiming the company hasn't lived up to its potential.
Trian, co-founded by Nelson Peltz, said in a regulatory filing
that it has met with Sysco Chief Executive Bill Delaney and
Chairman Jackie Ward to discuss ways to improve Sysco's
profitability and increase value for shareholders.
"We welcome collaborative discussions with investors who share
our interest in creating value," a Sysco spokesman said.
Sysco shares rose about 6% in heavy trading Friday
afternoon.
Trian said Sysco should run its business more efficiently and
better align management's compensation with performance. The fund
is now Sysco's largest shareholder, according to FactSet.
"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," the company said Friday afternoon.
Trian declined to comment further but said in the regulatory
filing that it intends to have ongoing discussions with Sysco's
management.
The fund, which has $12 billion in investible assets, has
notched a string of big wins in recent years in its battles with
corporate boards--but one high-profile loss.
Mr. Peltz secured a seat on the board of Mondelez International
Inc. in early 2014 after pushing the company to cut costs and weigh
a merger with the snacks business of PepsiCo Inc. When he was named
to the board, however, he said he would recuse himself from
discussions over Mondelez's next steps with regard to Pepsi.
Trian also secured a board seat at Bank of New York Mellon
Corp., where it was pushing for cost cuts and other strategic
changes. The bank added Trian co-founder Ed Garden to its board in
December, five months after the firm took a 2.6% stake in the
company.
Yet Trian didn't have the same success at DuPont Co., where it
waged an unsuccessful battle for board representation. DuPont's
stock is down about 24% since Trian failed to secure enough votes
for a board seat at the company's annual shareholder meeting in
May.
Houston-based Sysco, which delivers food and supplies to
restaurants and other eateries, recently dropped its plans to merge
with rival US Foods Inc. following a judge's ruling against the
deal on antitrust grounds.
The $3.5 billion merger was in the works for about 18 months,
eating up Sysco's time and money as it prepared to fight the
Federal Trade Commission in court and move ahead with integration
planning. In the latest quarter, reported Monday, Sysco logged $430
million in merger-related costs, contributing to a 71% decline in
profit.
Sysco is in the midst of piecing together a new strategy, which
it has said will involve internal cost-cutting. It also plans to
update its technology and product assortment to compete with rivals
that have better online ordering and a wider selection of natural
and local foods.
Sysco, the nation's largest food distributor, has struggled with
increased competition from smaller rivals in recent years. The main
appeal of the planned acquisition of US Foods was to create savings
with its larger scale that would help reverse a yearslong trend of
declining profit margins.
Chelsey Dulaney contributed to this article.
Write to Annie Gasparro at annie.gasparro@wsj.com and Maureen
Farrell at maureen.farrell@wsj.com
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