Activist investor Starboard Value has taken a “significant” shareholding in frozen potato products supplier Lamb Weston and is pushing the company to accelerate restructuring measures, including a potential review or sale of international assets.

In a letter to the company’s management, the New York-based investment firm said Lamb Weston should move faster to improve profitability and sharpen its strategic focus. Among its recommendations is a strategic review of overseas operations, including the possible divestment of certain assets in the Asia-Pacific region.

The intervention adds further pressure on the Idaho-based processor, one of the world’s largest suppliers of frozen French fries and potato products to foodservice customers such as McDonald’s. The company has already been under scrutiny from activist investors in recent years as shareholders have questioned its performance and strategic direction.

Focus On Margins And Cost Reductions

Starboard said Lamb Weston is “well positioned to deliver meaningfully greater shareholder value” but argued that more aggressive cost-cutting is needed.

The investor called for the company to double its cost-savings programme to USD 500 million by 2028, up from the USD 250 million initiative already announced. According to Starboard, such measures would bring selling, general and administrative expenses to roughly 4.5% of net sales, which it described as a more appropriate level for the company’s operating structure.

In the letter, the firm criticised Lamb Weston’s historical reliance on pricing rather than volume growth.

“Most of the company’s revenue growth since IPO has been price-driven, as opposed to volume-driven,” Starboard wrote. “Therefore, we would expect Lamb Weston to have realised significant operating leverage. You have not. It is time to catch up.”

The investor also encouraged the company to target a medium-term EBITDA margin of 25%, arguing that a margin-based goal would provide stronger accountability than a cost-reduction target alone.

Pressure On International Portfolio

One of Starboard’s most notable proposals concerns Lamb Weston’s international operations, particularly in the Asia-Pacific region.

According to the investor, the company’s APAC assets face increasing competitive pressure and have contributed little to overall earnings performance.

“Importantly, our diligence suggests the company’s APAC operations generate little in terms of earnings, but there would be considerable interest from local players should the company seek to divest its operations,” the letter stated.

The firm said a strategic review of the business could help “sharpen capital allocation, improve consolidated margins, and unlock additional value.”

The suggestion reflects a broader trend among activist investors pushing global food companies to streamline portfolios and concentrate on core, high-margin operations.

Ongoing Shareholder Activism

The pressure from Starboard follows earlier activism by Jana Partners, which built a position in Lamb Weston in 2024 and argued that the company’s shares were undervalued.

At the time, Jana criticised management for what it described as a “litany of self-inflicted missteps that have led to underperformance for shareholders” and pushed for strategic changes, including exploring a potential sale of the business.

The company subsequently appointed Michael Smith as chief executive at the start of 2025, promoting him from his previous role as chief operating officer. Board changes were also implemented last summer following pressure from shareholders, alongside the launch of the USD 250 million cost-saving programme.

Starboard’s latest intervention indicates that investors continue to believe further restructuring is required to unlock shareholder value.

Company Response

In response to the investor’s letter, Lamb Weston signalled that it remains open to dialogue with shareholders.

A company spokesperson said: “Lamb Weston values ongoing and constructive dialogue with its shareholders and appreciates productive feedback to drive long-term shareholder value.”

The spokesperson added that the company’s leadership team has already taken steps to strengthen its position.

“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.”

With activist investors now applying pressure from multiple fronts, Lamb Weston faces renewed scrutiny over its cost structure, global footprint and growth strategy in the highly competitive frozen potato products market.