Unilever: Trian has entered the chat
DD doesn’t envy the task ahead for Unilever’s investor relations department.
Chief executive Alan Jope has landed in the line of fire of angry investors, following an abortive tilt at a £50bn deal that intensified focus on the company’s weak share price performance in recent years.
Now the UK consumer goods group, which had been seeking to buy GlaxoSmithKline’s consumer health business to drive a transformation of its portfolio of products, has another potential headache on the horizon: Trian Partners, the US-based activist hedge fund co-founded by Nelson Peltz.
The FT’s Arash Massoudi, Harriet Agnew and Judith Evans revealed on Sunday that the activist fund, which has pushed for change at several other large consumer companies over the past decade, has built a stake in Unilever.
The revelation, at least initially, has brought a bit of respite. During a tumultuous trading day where European markets swung to heavy losses, shares in Unilever climbed 7.3 per cent and pushed the company’s market cap back above £100bn.
Unilever also jumped into action, with news coming out that it is planning to cut thousands of management jobs as it accelerates a push to improve sales growth.
Jope will be hoping that his response has been swift enough to show Unilever’s growing chorus of disgruntled investors that he’s got the message. Otherwise, he risks leaving the door open to Trian and Peltz, who have yet to comment publicly, to give them a reason to switch up their loyalties.
It’s still unclear what kind of demands Trian would make should it choose to stage a campaign.
While Peltz’s efforts to push for change haven’t always gone as planned, the activist investor has waged successful campaigns at some of the consumer industry’s largest corporations including Procter & Gamble and Sysco.
Martin Deboo, analyst at Jefferies, wrote on Monday: “We have long been of the view that the right path to unlock value at Unilever is via a faster rate of disposals from its slow-growing foods businesses, or a separation between foods and [the household and personal care division], via a sale or spin [off]. We think that Trian might take a similar view.”
For further reading on Peltz, DD’s Rob Smith recommends this excerpt from Connie Bruck’s seminal 1988 book The Predators’ Ball detailing the billionaire’s alleged risqué Long Island tennis matches with the late corporate raider Saul Steinberg.