The New York investment firm aiming for a boardroom battle at Performance Food Group, the biggest Fortune 500 firm in Richmond, has backed down, a filing with the U.S. Securities and Exchange Commission says.
Sachem Head Capital Management has withdrawn a business proposal it had planned to present at Performance Food’s annual meeting, as well as its nomination of four directors to the Goochland County-based firm, the filing said.
The filing gave no details about the Sachem Head proposal.
Performance Food has said that the investment firm had been pressing it to merge with Illinois-based US Foods, a slightly smaller firm that also specializes in distributing food to stores, restaurants and institutions.
Performance Food and US Foods agreed earlier this month to explore a possible combination.
In a conference call with Wall Street analysts last month, US Foods chief executive officer David Flitman said his firm had approached Performance Food to explore a combination, but that the company had declined to do so.
Performance Food said its agreement with Sachem Head included appointing the investment firm’s founder, Scott Ferguson, to its board, and said he would be included in the company’s slate of director nominees at the annual meeting.
Ferguson promised he would resign from the Performance Food board if Sachem Head’s holding of Performance Food stock amounted to less than 1% of the outstanding total.
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Sachem Head, meanwhile, promised to vote its shares in line with any recommendations from the board, except that it would be permitted to vote in its sole discretion on “any proposal to approve an extraordinary transaction.” What that meant was not defined in the SEC filing.
“This outcome is the result of constructive engagement with Scott and his team and demonstrates our Board’s openness to fresh perspectives,” said George Holm, chairman and chief executive officer of Performance Food.
Ferguson said Sachem Head appreciated what he called a positive dialogue with Performance Food directors and executives.
“Scott’s appointment reflects a shared commitment to PFG’s continued success and to enhancing stockholder value. He brings important investor perspective as well as food distribution industry and corporate governance experience,” said Manuel Fernandez, an independent director of Performance Food.
Robert Sledd started Goochland County-based Performance Food in 1987. He later served as senior economic adviser to Gov. Bob McDonnell.
Performance Food Group climbed four spots to No. 80 in the latest Fortune 500 rankings and was once again the Richmond region’s largest firm by total annual revenue. The company had $54.7 billion in revenue and 36,800 employees, according to this year’s rankings.
Ferguson started Sachem Head in 2012. The firm describes itself as following a concentrated, value-oriented investment strategy.
In a 2023 interview with the Reuters news agency, Ferguson said one of the toughest tasks activist investors face may be to replace a company’s chief executive.
He said doing that had paid off with three of Sachem Head’s investments at the time: US Foods, chemicals company Olin Corporation and flavors and fragrance company IFF.