Shares of Whole Foods Market, Inc. (NASDAQ: WFM) surged nearly 10 percent on Monday after activist investor Jana Partners announced a stake in the company and suggested it to consider for sale.
The investment firm acquired an 8.3 percent stake in Whole Foods, according to a regulatory filing on Monday.
“The shares are undervalued and represent an attractive investment opportunity,” the investment firm said in the filing. “Jana has substantial experience analyzing and investing in the grocery sector and more broadly across the food and retail sectors.”
Whole Food, an organic-food supermarket chain, has been struggling in the recent years due to growing competition. Wal-Mart Stores and some other smaller supermarket chains have focused on a strategy of lower pricing to attract more customers. Whole Foods plans to close nice stores to cut costs.
"Whole Foods Market welcomes investment in the company and is open to the views and opinions of all of our shareholders," Whole Foods spokeswoman Brooke Buchanan said in a statement late Monday. "We value constructive dialogue toward our shared goals of creating shareholder value, successfully executing on our strategic priorities and taking actions that will position the company for continued success."
Jana now is the second-largest shareholder in Whole Foods, which has about 440 stores in the U.S. The activist investor suggested the company to consider a possible sale to turnaround the company.
Whole Foods’ shares declined 2.9 percent to $33.16 in the early trading on Tuesday after jumping about 10% on Monday.