(Bloomberg) -- Activist investor Legion Partners Asset Management LLC has amassed a stake in wholesale distributor Chefs’ Warehouse Inc. and has nominated board directors.

The investor is urging the company to limit additional acquisitions and focus on improving its profit margin, according to a letter sent to other Chefs’ shareholders on Thursday that confirmed an earlier Bloomberg News report. Legion, which has an economic interest of 3.3% in Chefs’ Warehouse, is seeking four seats on the company’s 10-member board. 

Legion said in the letter that the board of Chefs’ Warehouse has failed to hold management accountable for not improving its profitability and has instead supported the deployment of $800 million in acquisitions. 

A representative for Ridgefield, Connecticut-based Chefs’ Warehouse didn’t immediately respond to requests for comment. 

Chefs’ Warehouse, which distributes specialty food products, has been telling investors since 2014 that it targets an earnings before interest, taxes, depreciation and amortization margin of 7% and has failed to achieve that goal, Legion said. The company’s best-performing year for that metric was 2015, when it saw an Ebitda margin of 6.17%, according to the letter. 

“We believe this lack of progress is a result of a stale board that lacks the skills and independence required to significantly improve results, and instead has enabled a culture of complacency at the company’s highest levels,” Chris Kiper and Ted White, co-founders of Legion, wrote in the letter.

Legion’s Nominees

The directors nominated by Legion include: Kiper, Legion’s managing director; Richard Peretz, a former chief financial officer of United Parcel Service Inc.; Keith Rohland, previously the chief information officer of US Foods Holding Corp.; and marketing executive Wendy Weinstein. All the nominees would have to stand for election in the general meeting. 

Legion first invested in Chefs’ Warehouse in 2017 and asked the company to adopt a majority voting standard and to examine executive compensation, according to a statement at the time. The company and Legion later reached a cooperation pact that included the appointment of two new directors.

Shares of Chefs’ Warehouse have fallen more than 17% in the past year, giving it a market value of about $1.28 billion at Wednesday’s closing price of $32.27. Legion contends the shares could reach $85 over the next five years. 

“Legion Partners believes that Chef has tremendous potential to thrive as a leader in specialty food distribution, however, we feel strongly that substantial change to the board is required to put the company on a path to value creation for all shareholders and stakeholders,” Kiper and White said in the letter.

This month, White was appointed to the board of Clear Channel Outdoor Holdings Inc. after the investment fund took a stake last year. Legion is pushing the company to speed up asset sales and explore a sale. 

Current board members at Chefs’ Warehouse include Katherine Oliver, a principal at Bloomberg Associates, a pro-bono consultancy under the charitable organization of Bloomberg LP founder Michael Bloomberg.

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