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After P&G revamp, activist investor Peltz moves on to Unilever

Stock Markets May 31, 2022 07:56AM ET
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© Reuters. FILE PHOTO: Nelson Peltz founding partner of Trian Fund Management LP. speak at the WSJD Live conference in Laguna Beach, California October 25, 2016. REUTERS/Mike Blake/File Photo
 
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By Sachin Ravikumar and Richa Naidu

(Reuters) - Billionaire activist Nelson Peltz will join the board of Unilever (NYSE:UL), the consumer goods giant said on Tuesday, heaping pressure on the maker of Dove soap and Hellmann's mayonnaise as it reviews its strategy.

Shares in the London-listed group jumped 7% as investors bet Peltz, whose hedge fund Trian has built up a 1.5% stake in Unilever, will use his new position as non-executive director to instigate the kind of turnaround he helped oversee at other consumer companies, including Procter & Gamble (NYSE:PG).

It is Peltz's latest intervention in a major consumer goods company and he is likely to push Unilever for a bigger revamp of strategy after an unsuccessful 50-billion-pound ($63-billion) bid to buy GSK's consumer healthcare arm in January, Unilever's third attempt.

"We look forward to working collaboratively with management and the board to help drive Unilever's strategy, operations, sustainability, and shareholder value," Peltz said in a statement.

Unilever investors have been disappointed by the company's lacklustre share performance, the botched attempts to buy GSK's consumer products business and for focusing on sustainability more than financial performance.

Peltz, who runs New York-based Trian, is known for his interest in consumer-oriented firms and proposing operational changes at the hedge fund's portfolio companies. He has previously been on the boards of Procter & Gamble Co, Mondelez (NASDAQ:MDLZ) and Heinz.

Analysts and Unilever investors welcomed Peltz's appointment, saying the billionaire could revamp company culture and financial performance, particularly in his role on the compensation committee.

"I think it's fantastic news," Jack Martin, fund manager at Unilever shareholder Oberon Investments, said. Fellow Unilever investor Waverton Investment Management also welcomed the news.

"Nelson Peltz is a man with extensive experience of taking activist stakes in some of the largest consumer companies in the world and has been enormously successful doing so," Martin added.

RETURN OF THE P&G PLAYBOOK

Unilever has already taken some steps to cut costs by consolidating its headquarters in London and getting rid of some slower growing businesses like its Lipton tea brand.

The company, which employs about 148,000 people worldwide, has also said it plans to cut about 1,500 management jobs in a restructuring to create five product-focused divisions - a revamp that echoes P&G's reshaping three years ago.

"We have held extensive and constructive discussions with him and the Trian team and believe that Nelson's experience in the global consumer goods industry will be of value to Unilever," Unilever chairman Nils Andersen said.

Trian is now Unilever's fourth largest shareholder, according to Refinitiv data.

Investors will be hoping Peltz will bring the playbook that worked at Cincinnati-based P&G to Unilever, helping to streamline the company and revive its share price.

In 2017, the activist investor called for a slew of changes at P&G, after which Peltz joined its board in March 2018 following a months-long proxy fight.

P&G's stock price has risen nearly 90% since then. He left the board last year.

Shares in Unilever have slumped well below their 2020 pandemic lows this year and are still down 30% from an all-time high reached in 2019.

"Most of his (Peltz's) actions will count as 'back to basics': investing in innovation, fixing incentive schemes, accelerating the pace of acquisitions and disposals, etc," Bernstein analyst Bruno Monteyne said.

Monteyne said the most "Trian-unique element of the P&G plan was his proposal to split P&G into independent operating units" and doing so at Unilever would "make a lot more sense".

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After P&G revamp, activist investor Peltz moves on to Unilever
 

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