Idaho french-fry giant sued over ‘artificially inflated’ share prices. Stock drops 30%

Wendy Culverwell, Idaho Statesman

AMERICAN FALLS (Idaho Statesman) — Lamb Weston Holdings Inc. and 2 elder executives violated national securities laws arsenic nan frozen-potato elephantine rolled retired a package system, according to a people action lawsuit.

Lamb Weston, based successful Eagle, is simply a starring shaper of gallic fries and different frozen-potato products sold astir nan world to restaurants and retailers. McDonald’s is simply a awesome customer.

The institution employs more than 1,000 group successful Idaho, according to nan Idaho Department of Labor. Besides its office adjacent nan intersection of Eagle Road and State Street, Lamb Weston has has 2 plants successful Idaho, successful Twin Falls and American Falls, supplied by adjacent murphy farmers. It besides employs much than 3,000 group successful nan Tri-Cities area of Washington state.

Lamb Weston toiled softly for decades successful nan Treasure Valley while building itself into a world frozen-potato-products powerhouse nether nan ownership of ConAgra, 1 of nan largest nutrient manufacturers successful nan nation, nan Idaho Statesman antecedently reported. It spun disconnected from ConAgra successful 2017, becoming an independent, publically traded company.

Now nan Cleveland Bakers and Teamsters Pension Fund is suing Lamb Weston, its president and CEO, Thomas Werner; and its main financial officer, Bernadette Madarieta; alleging nan company’s banal value was artificially inflated erstwhile nan institution misrepresented problems it was having pinch its caller package system.

Lamb Weston has not issued a general consequence to nan lawsuit, which seeks a assemblage trial. A spokesperson could not beryllium reached for remark this week.

Thomas Werner successful beforehand of a show of Lamb Weston’s frozen-potato products astatine its caller Boise office. “When you boil it down, group emotion fries, and we waste fries,” he says. | Kyle Green, Idaho Statesman

LAWSUIT SAYS COMPANY’S ASSURANCES WERE FALSE

The pension money sued connected June 13 successful national territory tribunal successful Boise. It seeks to correspond nan pension money and immoderate different investors who bought shares of Lamb Weston’s communal banal betwixt July 2023 and April 2024. The money is based successful Valley View, Ohio, a Cleveland suburb.

According to nan lawsuit:

Lamb Weston announced that it had completed nan creation of a caller Enterprise Resource Planning package strategy connected July 25, 2023, and said it would statesman implementing it crossed its network.

The strategy would interface pinch important aspects of nan business and was meant to thrust ratio done accrued automation. The company’s financial and operating systems transitioned to nan caller package successful November 2023.

Lamb Weston indicated it knowledgeable nan “usual bumps” arsenic it rolled retired nan caller system, but those comments were “false,” and defendants “knew of, aliases recklessly disregarded,” problems pinch nan measurement nan caller strategy functioned.

Lamb Weston and executives discussed nan package successful various filings pinch nan Securities and Exchange Commission, which regulates publically traded companies, and to analysts and successful news releases.

As a consequence of nan “premature launch,” Lamb Weston income projections for its 2024 fiscal twelvemonth “lacked a reasonable actual basis.” The consequence was that “shares of Lamb Weston communal banal traded astatine artificially inflated prices.”

LAMB WESTON DISCLOSED PROBLEMS IN APRIL

Lamb Weston disclosed nan challenges pinch nan package strategy erstwhile it released a third-quarter net connection connected April 4, a day marked by a crisp driblet successful its stock prices that has not yet recovered.

The net connection said nan institution mislaid $135 cardinal successful sales. Lamb Weston lowered its projected income for nan fiscal twelvemonth by $330 million.

The suit said nan disclosures caused Lamb Weston stock, which trades connected nan New York Stock Exchange nether nan awesome LW, to autumn by $19.59 per share, aliases complete 19%. On Tuesday, Lamb Weston shares were trading astatine astir $79 per share, 30% beneath their 52-week highest of $113.28, group connected July 23, 2023.

The pension money said it bought Lamb Weston banal astatine artificially inflated prices.

Lamb Weston is expected to supply a caller position into its financial position connected July 24, erstwhile it releases its 2024 fourth-quarter and full-year results.

The pension money is represented by Boise attorneys Nathan Pittman and Scott McKay of Nevin, Benjamin & McKay LLP, together pinch respective New York firms.

Several unrelated rule firms issued news releases based connected nan case, soliciting imaginable plaintiffs.