He may be 80 this year, but he is far from retired. In fact, if Nelson Peltz reports to a company, you have to be careful in the board room. And now it is Unilever CEO Alan Jope’s turn.
It was announced this weekend that billionaire Peltz, one of Wall Street’s best-known activist investors, would have taken a stake in Unilever with his hedge fund Trian Fund Management. It is not clear how great that interest would be.
That means: even more public pressure on Jope, who was already under heavy fire after the failed bid of no less than 50 billion pounds (60 billion euros) for the consumer branch of GlaxoSmithKline (GSK). Peltz has built a reputation for shaking up companies that he believes are not functioning well, from industrial conglomerate General Electric (GE) to ketchup maker Heinz. The applied strategy is often: streamline, save costs and possibly cut it up.
When he deems it necessary, Peltz fights hard. Notorious is the battle for the American food company Procter & Gamble (P&G), maker of Always sanitary pads, Pampers diapers and Gillette razors. In 2017, Trian took a stake in P&G, which according to Peltz sighed under “excessive costs and bureaucracy.”
He himself wanted – against P&G’s wishes – to become a supervisory director. An unprecedented battle for shareholder vote ensued, with tens of millions being spent, including Facebook videos. Peltz just won, as it turned out after a recount, with a difference of 0.0016 percent.
When he stepped down as a commissioner last year, CEO David Tayler thanked him for his “expertise” and “help”. In three years, P&G’s share price has nearly doubled.
The strategy is often: streamline, save costs and possibly cut it up
Nelson Peltz (1942) was born in New York and in his twenties took his first business steps in the food wholesaler that his grandfather founded. Together with his brother, he expanded the small business into a publicly traded company. He then started a modest investment fund at the time.
Although Peltz has invested in all kinds of companies – in addition to GE also chemical group DuPont and jeweler Tiffany & Co – the food sector has always remained a common thread. One of its biggest hits remains the American juice brand Snapple. He bought it in 1997, together with business partner Peter May, later co-founder of Trian in 2005. In 2000 they sold Snapple again to PepsiCo (Pepsi, Sisi, Doritos) for a whopping $1.45 billion, five times the amount they paid for it.
In 2013, his path crosses again with that of PepsiCo. With Trian he took an interest in the company. But Peltz doesn’t always get his way: His attempts to get the top to sell the snack division fail.
In recent years, Trian also bought (and sold) interests in Kraft Foods, Domino’s Pizza, and the aforementioned Heinz, but also the French Danone and the British Cadbury. All companies that, according to Peltz, were not performing at their peak at that time.
In that respect, Unilever (50.7 billion turnover in 2020) is actually not such a surprising choice: the food company is ailing. The course has been more or less the same for years and the criticism is increasing. Earlier this month, CEO Jope also got the concerned shareholder Terry Smith, founder of Fundsmith, after him. He accused the top of the company of being “obsessed” with sustainability and of neglecting the “foundations of business operations”.
A week later, news came about the failed takeover of GSK’s consumer business, which was very poorly received on the stock exchange. Incidentally, Peltz had already started buying Unilever shares before that time, wrote The New York Times this week.
What can Unilever expect from Peltz? In any case, his involvement has already given a boost to an old discussion: that about the possible divestment of the food branch (Magnum, Knorr, Calvé). Some critics think that Unilever would be better off with just the care products (such as Dove shower gel) and cleaning and laundry products (Cif, Omo) divisions. Peltz has been a proponent of these kinds of measures in the past, such as with PepsiCo.
He has not yet publicly commented on the news. But investors are already reacting enthusiastically: the price shot up about 7 percent on Monday.
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