By Svea Herbst-Bayliss
NEW YORK (Reuters) – Activist investor Jana Partners is urging the world's largest silicon carbide maker Wolfspeed Inc to explore all ways to improve shareholder value, including a possible sale, according to a letter reviewed by Reuters.
Jana, who owns a so-called “significant” stake in Wolfspeed, wrote in the letter that it is high time for the 37-year-old company with a market value of $2.8 billion to “pursue all avenues to improve WOLF's performance.” improve” and begin a “comprehensive review of strategic alternatives.”
“Such an exploration of alternatives could reveal numerous ways to emphasize and realize value, including through a sale,” said the letter to the board of the company headquartered in Durham, North Carolina.
A Wolfspeed representative did not immediately respond to requests for comment.
Wolfspeed's share price has fallen nearly 50% since January and has lost 63% of its value over the past 52 weeks as the company missed financial and operational milestones, leaving investors concerned about its strategy and capital allocation at a time when growth expectations were compromised. The main end market for electric vehicles is moderate.
Despite the company's differentiated manufacturing capabilities and its critical role as a U.S. supplier supporting the energy transition, every current shareholder appears to have lost money on their investment, Jana said in the letter.
“The board's efforts to reverse the dismal performance for shareholders must include a commitment to immediately initiate a comprehensive review of strategic alternatives,” wrote Jana managing partner Scott Ostfeld and company founder Barry Rosenstein.
Investment bank Goldman Sachs assigned the company an M&A price target of $126 per share, a nearly 500% premium to Wolfspeed's current share price of $22.12 on Monday, the letter said.
It also said Wolfspeed's strategic value was highlighted by Coherent Inc's recent sale of a minority stake in its silicon carbide business to two Japanese companies, DENSO and Mitsubishi Electric.
Jana called for a “back to basics” strategy, prioritizing execution and achieving key milestones at Wolfspeed's new factories in Mohawk Valley and Siler City, setting realistic goals and showing a path to an acceptable return on capital.
The letter also urged the company to reevaluate the size and timing of future investments, including a planned European manufacturing facility, until Wolfspeed demonstrates it can deliver on its existing operations.
Jana owned a small stake in Wolfspeed in the third quarter of 2023, but did not list a stake in the company in its regulatory filings for the fourth quarter of 2023.
Jana has a 23-year track record of investing in companies, including Frontier Communications which recently launched a formal strategic review under pressure from Jana and Freshpet, which has generated approximately 250% returns in the two years since Jana started the company went into the sea. .
Before that, Jana pushed for changes at companies like Whole Foods Market, which sold itself to Amazon.com Inc. in 2017.
(Reporting by Svea Herbst-Bayliss; Editing by Miral Fahmy)
