Jamba Inc. (NASDAQ:JMBA) has agreed to appoint Glenn W. Welling of Engaged Capital to the company’s board of directors. According to a new filing with the U.S. Securities and Exchange Commission, Jamba Inc. (NASDAQ:JMBA) entered into a settlement agreement to appoint Mr. Welling and James C. Pappas, managing member of JCP Investment Management, to the company’s board, effectively immediately. Engaged Capital holds 1.43 million shares of Jamba Inc. (NASDAQ:JMBA), representing 8.2% of the company’s common stock, the filing showed.
Under a settlement agreement with Engaged Capital and certain of its affiliates, Jamba Inc. (NASDAQ:JMBA) agreed to appoint Mr. Welling and Mr. Pappas to its board, with terms expiring at the company’s 2015 annual meeting of stockholders. At the same time, Jamba Inc. (NASDAQ:JMBA) agreed to appoint Mr. Welling as a member of the compensation and executive development committee of the board, and Mr. Pappas as a member of both the nominating and corporate governance committee and the audit committee of the board.
Further, Jamba Inc. (NASDAQ:JMBA) agreed to take all necessary actions to nominate each of Mr. Pappas and Mr. Welling for election as an incumbent director at the 2015 annual meeting.
On the other hand, Engaged Capital and JCP Investment Management have agreed to vote their shares in favor of the election of the company’s slate of directors at the 2015 annual meeting. Additionally, JCP Investment Management will, among other things, withdraw its nomination of candidates to stand for election at the company’s 2015 annual meeting. JCP Investment Management and certain of its affiliates own about 2.3% of Jamba Inc. (NASDAQ:JMBA)’s outstanding shares, according to a news release.
Engaged Capital was founded by Mr. Welling in 2012. Engaged Capital has a diversified portfolio, worth around $135 million, and focused primarily services, technology and healthcare stocks. The fund’s investment strategy is based on fundamental analysis, derived from a combination of in-house and external research. Mr. Welling is the founder and chief investment officer of Engaged Capital.
Engaged Capital seems to be a big fan of Volcano Corporation (NASDAQ:VOLC), Medifast Inc (NYSE:MED), Jamba Inc. (NASDAQ:JMBA), in all these companies the fund upped its stake during the third quarter of 2014. At the end of September, Engaged Capital reported in a SEC filing that it went activist on Volcano Corporation (NASDAQ:VOLC), holding almost 2.64 million shares of the company. In a letter, the fund also asked Volcano Corporation (NASDAQ:VOLC) to appoint representatives from the shareholders to the company’s board, who will be capable of acting in the best interest of shareholders and maximize the value of the company. In the third quarter, Engaged Capital increased its holding of Medifast Inc (NYSE:MED) by 6%, owning 588,000 shares of the company. The fund reported holding 1.18 million shares of Jamba Inc. (NASDAQ:JMBA) at the end of the third quarter.
Jamba Inc. (NASDAQ:JMBA) is a health and wellness brand and the retailer of freshly squeezed juice, with a market cap of nearly $279 million. Engaged Capital initiated its position in Jamba Inc. (NASDAQ:JMBA) in July 2014, when it reported ownership of 1.2 million shares, representing 7% of the of the company’s shares outstanding. Since then, share price of the company’s stock improved by 34.75%. On Wednesday, the stock closed at $15.82. The stock has the consensus average target price of $15.10, and the consensus average recommendation is ‘BUY.’
In order to enhance shareholder value, Jamba Inc. (NASDAQ:JMBA) is working on an asset light model and other initiatives. The company said in statement that it refranchised 13 stores and added 51 new global franchise stores through the end of the third quarter of 2014. The company believes to achieve its target of at least an 80%+ franchise-to-company-owned model in the next 12 months.
In addition, Jamba Inc. (NASDAQ:JMBA) has set a goal of reducing its overall G&A expense by 20%, resulting in about $30 million of annual G&A expense. As of December 1, 2014, the company has repurchased 477,356 shares of its common stock for a total of $6.0 million under its stock repurchase program.
Aside from Engaged Capital, Glenhill Advisors, led by Glenn J. Krevlin, is also the largest shareholder of Jamba Inc. (NASDAQ:JMBA), in which the fund disclosed owning 1.45 million shares at the end of the third quarter. Bandera Partners, run by Gregory Bylinsky and Jefferson Gramm, reported holding 180,000 shares of the company.
Disclosure: none
