Trian Partners, an activist hedge fund owned by Melson Peltz, has built a stake in Unilever Plc, putting additional pressure on its Management after a failed bid to buy the consumer health division of GlaxoSmithKline Plc.
As per Bloomberg News, Unilever stocks registered their worst weekly performance since the fall in March 2020 pandemic, after it confirmed on January 16 that its offer of $ 68 billion (50 billion pounds) was declined by GSK as a too-low bid.
Financial Times did not report the details about the size of the stake of Trian or when it began. The Chief Executive Officer of Unilever, Alan Jope’s, conceded publicly after analysts requested him not to go ahead with the GSK unit as a flashback to Kraft Heinz Co. failing to acquire Unilever for an amount of $ 143 billion in 2017.
Terry Smith, the Fund Manager, called the failed GSK bid some sort of near-death experience and requested Unilever to concentrate on fixing its business first. He stopped short of calling for Unilever’s CEO’s resignation. Terry Smith is the head of Fundsmith and the 13th largest investor in Unilever.
Smith also said that Unilever had lost the plot in focusing more on financial returns than seeking to promote the brands of a sustainable ethos like Hellmann Mayonnaise.
After retiring from Procter & Gamble board in August last year, Billionaire Melson Peltz is now turning his attention to Unilever. He spent nearly four years at the good consumer giant after making several changes aimed at improving the performance of P&G.
Trian has not yet responded to the report in FT, and Unilever declined to comment.
Alan Jope’s setback with GlaxoSmithKline raises the question of whether Unilever will make radical changes, the way it was seen after Kraft’s failed bid for an iconic brand like Dove soap. The debacle of Kraft’s failed bid had spurred Unilever to drop its Anglo-Dutch culture and consolidate its headquarters in the U.K. It adopted a more aggressive acquisition that has been unable now in its first big test.
The reported stake building by Peltz may cause Unilever’s share to gain on Monday when the stock market opens after the weekend. Activist investors are typically shareholders’ best friends. They take stakes in companies that they consider undervalued and then push for changes such as cost-cutting measures, higher dividend pay-outs, buyback of shares, management shake-ups, and sometimes break up of companies.
