In a new filing with the Securities and Exchange Commission, Barry Rosenstein‘s JANA Partners presented five canditates to be elected to the board of directors of PetSmart, Inc. (NASDAQ:PETM). The nominees are Edwin M. Crawford, Julian C. Day, Thomas W. Dickson, Susan Feldman, and Lawrence V. Jackson. JANA owns around 9.69 million shares of Petsmart, the stake being equal to 9.8% of the company’s stock.
JANA added PetSmart to its equity portfolio during the second quarter and it held initially 9.82 million shares including options. The investor went activist and declared its intention to negotiate several issues with the board, including a review of strategic alternatives and the possibility of selling the company, as well as management and board composition and the company’s capital structure. Over the next months, Mr. Rosenstein sent a couple of letters to PetSmart, Inc. (NASDAQ:PETM)’s board. In a letter from July, Mr. Rosenstein urged the company’s board to cancel its leveraged recapitalization plan, stating that it can create more risk for shareholders. A couple of weeks later, JANA disclosed another letter sent to PetSmart in which it accused the board of resisiting their proposal to review all strategic alternatives, especially the sale of the company, while focusing on options that would provide as much value.
Moreover, it is important to mention that JANA does not stand alone in its proxy fight with PetSmart, Inc. (NASDAQ:PETM)’s board and benefits from the support of other shareholders of the company. In fact, soon after JANA went activist, Longview Asset Management, managed by James A. Star, also upped its stake in the company and sent a letter to the board, in which it expressed its support of JANA’s plans and also stated that the board should consider a review of strategic alternatives and the sale of the company. Longview owns 8.93 million shares of PetSmart as of the end of September.
Very often an activist situation attracts the attention of passive investors, and JANA’s involvement in PetSmart, Inc. (NASDAQ:PETM) was no exception. In this way, during the third quarter, John Paulson‘s Paulson & Co. initiated a stake in PetSmart, holding 4.17 million shares at the end of September. Joshua Friedman and Mitchell Julis‘ Canyon Capital Advisors also disclosed a new position with 1.41 million shares.
Barry Rosenstein is a famous activist investor on the Street, which is why his involvement in a company usually has a positive impact on the stock. In PetSmart, Inc. (NASDAQ:PETM)’s case, the stock jumped by around 12% on the back of JANA’s disclosure of a stake in the company. Aside from PetSmart, JANA Partners has recently nominated three new independent directors to the board of Civeo Corp (NYSE:CVEO), and went activist on Hertz Global Holdings, Inc. (NYSE:HTZ).