Activist investor Nelson Peltz has joined the board of consumer goods group Unilever after acquiring a 1.5% stake, sending the company’s stake higher.
The appointment of the founder of Trian Fund Management has raised expectations of a dramatic overhaul at Unilever, which has been met with displeasure in the broader investment community over its lackluster performance and unsuccessful attempt to get the job done. acquired GlaxoSmithKline’s consumer healthcare division.
The maker of Magnum cream, Dove soap and deodorant Ax said Peltz will join as a non-executive director on July 20 and also become a member of the group’s compensation committee.
The altitude of Peltz Sitting on 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, Heinz and Mondelez.
The Financial Times reported in January, Peltz’s $8.5 billion fund took a position in the UK company. Unilever disclosed on Tuesday that Trian holds a 1.5% stake, making it the group’s fourth-largest shareholder, according to data from Refinitiv.
Peltz said Trian has made a “significant” investment in Unilever, adding that he looks forward to “working together” with the group’s management.
“We believe it is a company with significant potential, through leveraging its strong portfolio of consumer brands and its geographic location,” he said.
Bruno Monteyne, analyst at Bernstein, said Unilever is suffering from its presence in “structurally low-growth categories” along with “investor confidence in management and administrative Council”.
Shareholders’ discontent flared earlier this year following news of the Unilever’s efforts to buy GSK’s consumer healthcare division, to be spun off as Haleon, for £50 billion.
But investors have Disillusioned with Unilever’s declining performance. Before the share price spiked early Tuesday, its shares had lost 16% since chief executive Alan Jope took over in 2019. Shares of the group were up as much as 7% in trading. early Tuesday before falling back to 5.3%. cents above the opening price, at £36.80.
Peltz’s arrival adds to the pressure on Jope and the company’s president, Nils Andersen. Monteyne said Peltz is likely to focus on “back to basics” changes like “investing in innovation, fixing incentive programs” [and] accelerate acquisition and liquidation”.
Peltz stepped down from P&G’s board last year, four years after he bought back a $3 billion stake in the company.
“At P&G, we believe Nelson Peltz has stimulated changes to culture, compensation and organizational structure,” said James Edwardes Jones, analyst at RBC Capital Markets. While he wasn’t entirely responsible for the much-improved P&G company it is today, he was a factor.
“We hope his presence can spur similar changes at Unilever as well as foster cross-investor engagement.”
However, Monteyne noted that P&G did not heed Peltz’s advice to split up into separate operating units. “In the case of Unilever, we think that makes a lot more sense because it may simply be too spread out to be effective,” he said.
Unilever announced in January that it would restructure the company into five divisions and cut about 1,500 jobs following news of the Peltz stake. It is also facing a sharp increase in costs.
It has also faced criticism from some investors for its focus on sustainability and “purposeful” brands. Top 10 shareholders Terry Smith, of Fundsmith, said they had “lost opportunity” after trying to define the purpose of brands like Hellmann’s mayonnaise.
Peltz said on Tuesday that he would seek to help “advance Unilever’s strategy, operations, sustainability and shareholder value to the benefit of all stakeholders”.
