US Foods says it has ‘constructively engaged’ with activist investor Sachem Head but has not reached a deal to avoid proxy battle

Food service company US Foods Holding Corp. said Monday it has “constructively engaged” with activist shareholder Sachem Head to avoid a proxy contest at its coming annual shareholder meeting but has been unable to reach an agreement. Sachem Head in February nominated seven candidates for election to the board and said it believes a “new culture of accountability is required at US Foods.” The investor owns a roughly 9% state in US Foods. On Monday, US Foods said in a letter to its shareholders that it is confident its plan is creating shareholder value. Its board has been “refreshed” with new directors, added in late March, who have “relevant skills and experiences” and are suited to lead the company through its strategy. The company “has constructively engaged with Sachem Head to avoid a proxy contest, but the erratic nature of Sachem Head’s demands has impeded a settlement,” said the letter. The shareholder meeting is scheduled for May 18. Shares were not yet active premarket but are down 5.8% in the last 12 months, while the S&P 500 has gained 5%.

Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.