(New throughout, adds details on Tourbillon's plans, updates
share price, fund performance)
By Svea Herbst-Bayliss
May 27 (Reuters) - Hedge fund Tourbillon Capital Partners LP
is urging organic food company SunOpta Inc . SOY.TO to sell
itself to a bigger rival, according to a letter sent to the
company on Friday.
The Canadian company's share price jumped 26 percent after
the $4 billion hedge fund asked it to hire an investment bank to
look at all ways to increase shareholder value, according to the
letter which was in a public filing.
Tourbillon, SunOpta's biggest investor with a 9.9 percent
stake, said it is going public with its request now after months
of private discussions because it worries that management and
the board may not be sufficiently committed to boosting the
company's value.
"Simply put, we believe SunOpta can become a more valuable
business as a part of a larger enterprise," Jason Karp, who runs
Tourbillon, wrote, according to the letter which was filed with
the U.S. Securities and Exchange Commission.
Tourbillon first bet on the Canadian company roughly six
months ago. Karp said it has been frustrated by a sagging share
price and the company's failure to turn strong products and
services into a "thriving business with an attractive public
market valuation."
The fund said it could eventually push for changes to the
board and management if business does not pick up. It also said
it would be ready to help if the company wanted to pursue a
management buy-out, acknowledging that "tough changes may be
best addressed in a private setting."
SunOpta's share price surged 26.70 percent to close at $4.84
on Friday and continued to climb some 2 percent in after hours
trading. Over the last six months, however, the stock remained
down 32 percent.
The company said it will "review Tourbillon's suggestions
and evaluate them on the basis of what is in the best interest
of all shareholders." It also said it remains focused on
creating efficiencies and improving operational excellence."
Toronto-based SunOpta is a leading global organic food
company specializing in sourcing, processing and packaging of
natural and certified organic food products.
Other big investors in SunOpta include West Face Capital,
Daruma Capital Management and Jennison Associates.
SunOpta's sinking share price has hurt Tourbillon's returns.
The firm, founded by Karp, who once worked for Steven A. Cohen's
SAC Capital Advisors, gained 10 percent in 2015 when most funds
lost money. This year it is off roughly 14 percent, an investor
said.
(Editing by Jeffrey Benkoe and David Gregorio)