A Source Says Jamba's Juice Could Include Buybacks or Dividends

Jamba Inc. JMBA could collect between $50 million and $100 million if it sold the "vast majority" of its company-owned stores, according to a source close to the juice and healthy foods retailer. That cash could be used for the benefit of shareholders through share buybacks or dividends, this person said. Such a move appears more likely after Jamba, which sells juice and other natural foods and beverages, on Tuesday settled a potential proxy contest and agreed to expand its board by one and add two dissident activist fund managers. JCP Investment Management LLC's managing member James Pappas and Engaged Capital LLC's founder Glenn Welling, two high profile activists, each received a seat on the company's board. Engaged has been publicly urging Jamba Juice to make changes since July and Pappas nominated six dissident candidates for the board in December. Welling and Pappas have been pushing for Jamba Juice to sell "the vast majority" of its remaining 272 company owned stores, leaving roughly 50 under Jamba Juice control, according to people familiar with the company. The insurgents want Jamba to use the proceeds from the sale for stock buybacks or special dividends, people familiar with the funds say. While capital distributions would provide a boost to all shareholders, Welling and Pappas will get the most out of it with their 8.2% and 2.3% respective stakes. Jamba already has 535 franchise-operated stores and it expects to add 500 new franchise-operated stores in the U.S. over the next five years. The addition of Welling and Pappas coincided with the company's announcement at an ICR XChange investor conference in Orlando, Fla., Tuesday that it wanted to increase the number of franchise-owned stores to more than 80% of the chain's total stores by year-end 2015. That expected increase represents both ramping up new store openings and selling company-owned stores, according to a Jamba Juice spokesman. Good enough for the activists? According to people familiar with Welling, the dissident believes the 80%+ goal is a "good start" but franchising the vast majority of their stores is "ultimately where they need to go" in the next "12-to-24 months." Welling and Pappas also wants Jamba to either close down some of the larger New York Jamba Juice locations or open them up to a franchise partner, according to people familiar with the situation. In addition, Welling categorizes Jamba Juice's consumer packaged goods business as "non-core" and one that "has not worked out," according to people familiar with Engaged. Expect more boardroom wrangling to come. Read more from:

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