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Break-up chatter at Unilever as Nelson Peltz’s Trian takes stake

·2-min read
Unilever owns consumer brands ranging from Marmite and Pot Noodle to Dove soap  (PA Archive)
Unilever owns consumer brands ranging from Marmite and Pot Noodle to Dove soap (PA Archive)

The City was today alight with speculation that embattled Unilever could face break-up pressure after a high-profile activist investor signaled the beginning of a campaign at the Dove soap to Ben & Jerry’s ice-cream maker.

The consumer goods group shot to the top of the FTSE 100, erasing almost all of last week’s losses, after it emerged that US activist investor Nelson Peltz had taken an undisclosed position.

The Financial Times first reported that Peltz’s Trian Partners had targeted the consumer goods giant.

The 79-year-old billionaire’s place on the share register excited investors given his track record at similar businesses. The New Yorker recently ended a four-year campaign at Gillette and Pampers owner Procter & Gamble that saw shares improve by 85%. Barclays said the City was weighing up whether “Unilever might become the next P&G”.

US activist investor Nelson Peltz,  founding partner of Trian Fund Management (REUTERS)
US activist investor Nelson Peltz, founding partner of Trian Fund Management (REUTERS)

Analysts speculated that Peltz could look to drive value through a break-up.

Bruno Monteyne, a senior analyst at Bernstein, said the “obvious moves” would be to push for a split at Unilever or install new management. Monteyne was one of the first to suggest Unilever could be a target for Peltz in a note last summer.

Analysts at JPMorgan and Jefferries agreed that Peltz may try to spin out Unilever’s food and refreshments business.

Barclays said less radical changes may be sought, in line with Unilever CEO Alan Jope’s recently announced plans to sell off slow growing brands and buy up names with more momentum.

Unilever shares rose 213p, or 5.8%, to 3888p.

While news of Peltz’s position excited investors, it heaps pressure on Unilever’s already under-fire board and management.

The group’s stock suffered its steepest weekly decline since the onset of the pandemic after a wildly unpopular attempt to buy pharma giant GlaxoSmithKline’s consumer healthcare business. That deal is now dead but the bid has led to questions about Unilever’s strategy and Jope’s future.

Analysts said Peltz was likely to push for a board seat at Unilever and would be vocal in any criticism he may have.

Clive Black, head of research at Shore Capital, said: “Peltz is not someone a board, never mind CEO, usually sits comfortably with on hearing the news of involvement.”

Trian began building a position in Unilever before news of the GSK bid became public, according to the Wall Street Journal, suggesting his views are unrelated to the recent deal-making.

His presence will heighten pressure on Unilever’s management to improve performance. Jope has promised a new strategy next month.

Barclays’ Warren Ackerman said: “From Unilever’s perspective, the status quo is not an option.”

Trian was contacted for comment. Unilever declined to comment.

Comment: Nelson Peltz joins the party at Unilever

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