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Alternative Market Briefing

Amazon/Whole Foods Deal bolsters Tourbillon's activist stake in SunOpta

Wednesday, June 21, 2017

Bailey McCann, Opalesque New York:

At the end of May, activist hedge fund firm Tourbillon Capital Partners wanted organic-food company SunOpta Inc. to sell itself. The firm had amassed an almost ten percent stake in the company and was pushing for SunOpta to hire bankers and start a process. Then, the Amazon/Whole Foods deal was announced. The two actions might not seem related, but during a presentation today at the Ben Graham Value Investing Conference sponsored by the New York Society of Security Analysts (NYSSA), Tourbillion CEO/CIO Jason Karp outlined why the Amazon deal effectively amounts to a SunOpta sale.

SunOpta is essentially a provider of white label organic food. Brands from Starbucks to Target use SunOpta as a sourcer and distributor of private label product lines. One of SunOpta's biggest clients is Whole Foods. SunOpta sources and creates the products in Whole Foods generic brand - "365 Everyday Value". According to Karp, with the Amazon deal, 365 is likely to end up online as part of Amazon Fresh, the company's online grocery delivery service.

"Amazon understands that millennial consumers aren't focused on brand-name products. They are focused on markers of quality or markers of values like organic groceries," Karp said during his presentation. "One of the biggest focus areas for Amazon is the private label marke......................

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