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Activist Hedge Fund Trian Builds Stake in Unilever: FT

Activist Hedge Fund Trian Partners Builds Stake in Unilever: FT

Nelson Peltz’s activist hedge fund Trian Partners has built a stake in Unilever Plc, the Financial Times reported, potentially adding pressure on management after a failed bid to buy GlaxoSmithKline Plc’s consumer-health unit.

Unilever shares recorded their worst weekly loss since the peak of the pandemic selloff in March 2020 after it confirmed on Jan. 16 that it offered 50 billion-pounds ($68 billion) for the healthcare unit. GSK rejected the bid as too low. The Financial Times didn’t report details on the size of Trian’s stake building or when it began. 

Unilever Chief Executive Officer Alan Jope’s public defeat came after analysts implored him not to pursue the Glaxo’s unit and was a flashback to Kraft Heinz Co.’s failed bid to acquire Unilever in 2017 for $143 billion. Fund manager Terry Smith called the GSK bid a “near-death experience” and urged the company to focus more on fixing its own business. 

Smith, who stopped short of calling for Jope’s resignation,  is the head of Fundsmith, Unilever’s 13th largest investor., He also said that the company had “lost the plot” in seeking to promote the sustainable ethos of brands such as Hellmann’s mayonnaise rather than focusing on financial returns. 

Billionaire Peltz is turning his attention to Unilever after retiring from Procter & Gamble Co.’s board in August after nearly four years and several dramatic changes aimed at improving performance at the consumer-goods giant. Unilever declined to comment and Trian wasn’t immediately available to respond to the report. 

Activist Hedge Fund Trian Builds Stake in Unilever: FT

It remains to be seen whether Jope’s setback with GSK will prompt the kind of radical changes implemented at Unilever after Kraft’s failed bid for the maker of iconic consumer brands like Dove soap. That debacle led Unilever to consolidate its headquarters in the U.K., ditch a cumbersome Anglo-Dutch structure, and adopt a more aggressive acquisition strategy that has now failed in its first big test. 

Unilever shares could benefit from Peltz’s reported stake building on Monday when stock markets open after the weekend as activist investors are typically shareholder’s best friends. Activists take stakes in companies they deem undervalued and push for changes such as higher dividends, share buybacks, cost cuts, management shake-ups, and sometimes the breakup of companies.

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