Jana Readies Slate For Potential PetSmart Battle

Nov 21 2014 | 12:40pm ET

Jana Partners has sent an ultimatum to PetSmart Inc.: Impress with its strategic review, or else.

Or else face a proxy battle, that is: The activist hedge fund, which owns a nearly 10% stake in the retailer, said yesterday that it had lined up five potential director candidates it is ready to nominate if it is unsatisfied with the results of the review. Jana has called on PetSmart to put itself up for sale, an option that PetSmart said it would explore in August.

The company has also announced plans to cut costs and return capital to shareholders in an effort to appease Jana and other investors, notably Longview Asset Management, which owns nearly as much of PetSmart as Jana, seeking changes at the company.

A pair of top private-equity firms, Clayton Dubilier & Rice and Kohlberg Kravis Roberts, are reportedly preparing a joint bid for PetSmart.

Jana’s potential slate is made up of former Caremark executive Edwin Crawford, former RadioShack Corp. CEO Julian Day, former Harris Teeter CEO Thomas Dickson, One Kings Lane co-founder Susan Feldman and former Wal-Mart Stores executive Lawrence Jackson. The hedge fund is also mulling the nomination of one of its own employees, Reuters reports.

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