Activist investor Nelson Peltz has joined the board of consumer goods group Unilever after acquiring a 1.5 per cent stake, sending shares in the company higher.
The appointment of the Trian Fund Management founder has heightened expectations of a drastic overhaul at Unilever, which faces discontent among its broader investor base over lacklustre performance and a failed attempt to buy GlaxoSmithKline’s consumer health division.
The maker of Magnum ice cream, Dove soap and Axe deodorant said Mr Peltz would join as a non-executive director on July 20th and also become a member of the group’s compensation committee.
The elevation of Mr Peltz to the board is the latest in a series of interventions in the consumer goods sector by the activist investor, who has previously sat on the boards of Procter & Gamble (P&G), Heinz and Mondelez.
The Financial Times reported in January that Mr Peltz’s $8.5 billion (€7.9 billion) fund had taken a position in the UK company. Unilever on Tuesday disclosed that Trian holds a 1.5 per cent stake, making it the group’s fourth-largest shareholder, according to data from Refinitiv.
Trian had made a “considerable investment” in Unilever, Mr Peltz said, adding that he was looking forward to “working collaboratively” with the group’s management.
“We believe it is a company with significant potential, through leveraging its portfolio of strong consumer brands and its geographical footprint,” he said.
Bruno Monteyne, analyst at Bernstein, said Unilever was suffering from its presence in “structurally low-growth categories” along with “a loss of investor confidence regarding management and the board”.
Shareholder discontent erupted earlier this year following news of Unilever’s attempts to buy GlaxoSmithKline’s consumer health division, soon to be spun off under the name Haleon, for £50 billion (€58.7 billion).
But investors were already disillusioned with the group’s languishing performance. Before the jump in its share price early on Tuesday, its shares had lost 16 per cent since chief executive Alan Jope took over in 2019. Shares in the group rose 9.43 per cent in London to £38.25. In New York, later in the day, there were up by over 10 per cent.
Mr Peltz’s arrival adds to pressure on Mr Jope and the company’s chair, Nils Andersen. Mr Monteyne said Mr Peltz was likely to focus on “back-to-basics” changes such as “investing in innovation, fixing incentive schemes [and] accelerating the pace of acquisitions and disposals”.
Mr Peltz stepped down from the board of P&G last year, four years after he had acquired a $3 billion stake in the company.
James Edwardes Jones, analyst at RBC Capital Markets, said: “At P&G, we believe Nelson Peltz stimulated changes to culture, remuneration and organisational structure. Although he isn’t completely responsible for the much-improved company P&G is today, he was a factor.
“We hope his presence can motivate similar changes at Unilever as well as drive cross-investor engagement.”
Unilever announced in January that it would restructure the company into five divisions and cut about 1,500 jobs following news of Mr Peltz’s stake. It has also been facing a steep rise in costs. — Copyright The Financial Times Limited 2022
(c) Copyright Thomson Reuters 2022
