The parent of smoothie chain Jamba Juice has appointed two independent directors to its board, squelching an attempt by activist investors to seek control, the company said Tuesday.
James Pappas, managing member of JCP Investment Management LLC, an affiliate of JCP Investment Partnership LP, and Glenn Welling, managing member and chief investment officer of Engaged Capital LLC, were named to Emeryville, Calif.-based Jamba Inc.’s board, effective immediately.
The two will also be included in Jamba’s slate of director nominees for election at the annual shareholders’ meeting, which is expected to take place before May 29.
One board member, whom Jamba declined to name, will not be nominated for re-election. With the changes, the board will be comprised of nine directors, including eight who are independent.
In a statement, Jamba CEO James White said the addition of Pappas and Welling to the board is in the best interest of the company and all shareholders.
“We are pleased to welcome Glenn and James to the board of directors, and are confident that their diversified expertise will add valuable perspective to Jamba’s board as we continue to execute on our growth strategy,” he said. “Jamba is focused on driving shareholder value as we expand our juicing platform and transition to an asset-light, franchise-focused model.”
In December, JCP Investment Partnership nominated six candidates for Jamba’s nine-member board, a move to seek control of the 807-unit Jamba Juice chain.
Hedge fund Engaged Capital, meanwhile, has also been pushing for change at Jamba Juice, including across-the-board cost-cutting measures, as well as stepping up refranchising efforts to give the chain a more asset-light model.
As a result of the agreement announced Tuesday, however, JCP agreed to withdraw its nomination of candidates for the 2015 board election and pledged to vote all shares in favor of Jamba’s slate, according to filings with the Securities and Exchange Commission.
Both JCP and Engaged Capital have also agreed to certain “standstill provisions,” and will not bring any business proposals for change prior to the shareholder meeting.
JCP owns about 2.3 percent of Jamba stock. In the past, the hedge fund has made investments in KFC franchisee Morgan’s Foods Inc. and Big Apple Bagels’ parent BAB Inc. Pappas has served on the boards for convenience store chain The Pantry Inc., as well as Morgan’s Foods.
Engaged Capital and affiliates own about 8.2 percent of Jamba’s common stock, according to SEC filings. Previously, Welling was a principal and managing director at activist equity fund Relational Investors LLC.
Together, JCP and Engaged Capital held 1,839,022 Jamba shares as of Tuesday’s filing.
Over the past several months, Jamba has responded to the activists’ demands for cost cutting and refranchising.
It has hired consulting firm Capgemini to identify cost savings and increase workflow efficiencies, with the goal of reducing general and administrative costs by about 20 percent, or $30 million.
The company is in the process of selling 114 company-owned locations to franchisees, the latest step in a plan to move to an 80-percent franchised model by the end of 2015.
Jamba is also looking to grow by 500 new domestic franchised locations over the next five years, and 200 to 300 international units within three to four years.
In late December, the company announced a workforce reduction of up to 23 positions in the Emeryville headquarters, or about 11 percent of support center staff, including three senior vice presidents.
Contact Lisa Jennings at [email protected].
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