Activist investor Elliott Management has built a sizeable stake in coffeehouse chain Starbucks and is currently having private discussions with the company’s management about improving its underperforming stock, according to a report by The Wall Street Journal.
Reportedly, the discussions between the two sides, described as “fluid”, have been taking place behind closed doors for several weeks, and an agreement is expected to be reached soon. The size of Elliott’s stake in Starbucks and the activist’s other demands remain unclear.
Starbucks’ stocks took a big hit back in late April after the company reported a 3% decline in same-store sales in North America and a 6% decline in international markets. This was the first time the company didn’t grow its sales on a quarterly basis in close to three years. Its net earnings also dropped by 15%.
Starbucks has seen a weakening demand in the United States, Canada, and especially China in recent months. The company has also been dealing with unionizing efforts and criticism from former CEO Howard Schultz.
Starbucks’ stock jumped close to 7% upon the report about Elliott’s involvement in the company to close at $79.27 per share on Friday. The company’s shares remain 15.37% down year to date.