Two of Unilever’s biggest investors have called for a radical shake-up of the company or its board following GlaxoSmithKline’s failed £ 50bn consumer health campaign.
Bert Flossbach, founder and CEO of Cologne-based Flossbach von Storch, an asset manager worth € 80 billion and a shareholder in the top 10, said the FTSE 100 consumer group should consider revising its three-tier structure. beauty, food and household products divisions.
“Unilever needs to seriously consider splitting the company,” he said. “Talking about synergies between different businesses is usually theoretical and is designed to maintain the status quo and is less than the efficiency gains you would get from splitting.”
Earlier, Flosbach was among those who encouraged German carmaker Daimler to separate its extensive truck division from its Mercedes-Benz luxury car business, which ended this week.
“If you are a food manager, you think differently than a household product manager or a beauty manager,” he added. “If you run these businesses under one structure, the distribution of capital can become a problem. And you are very diverse in a negative way, because you don’t know exactly what you stand for. ”
Flosbach said one option could be to keep the food business under the name Unilever and separate other divisions. “You increase efficiency and improve the spirit of a company when it has a clearer mission. Reducing costs alone is not enough. ”
Another of the top 20 shareholders called for the removal of Unilever Chairman Nils Andersen, citing fears that he and the board had allowed CEO Alan Joop to make growing offers for GSK, a potential deal, the size and timing of which blur investors and provoke a backlash.
The top 20 shareholder said a new off-board chairman should be appointed. He added that Andersen’s deputy could then assess Unilever’s strategy and whether Jopp and its chief financial officer, Graham Pitkeli, were fit for office.
Bruns Montaine, an analyst at Bernstein, said: “From the discussions I have had with shareholders, I think there will be many people who want to support a credible change for a new chair.
Continued shareholder discontent is heightening pressure on Jope and Unilever’s board, weeks after the Financial Times revealed that US activist Trian Partners had built a stake in the company.
Although Trian has not yet set out his arguments for change, analysts suggest the activist may insist on separating the food brands from his larger household division.
Last week, Unilever announced a reorganization, cutting 1,500 executives and dividing the company into five divisions, including ice cream and nutrition. That could pave the way for separation, according to Jefferies analyst Martin Debu.
Hermann Sogeberg, chairman of Unilever’s European Works Council, said staff had been told there were no plans for significant redundancies, but that Trian’s involvement was a concern for employees who feared splitting or losing more jobs.
The reorganization announced last week is a bit like walking in a circle. “Now we are exactly where we started when I worked here 20 years ago,” he said.
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However, analysts and investors are divided over whether structural reform would generate value for shareholders. The top 20 shareholder said Unilever should focus on improving performance in existing business before making major changes to the portfolio, while the top 25 shareholder said: “One thing I’m worried about is selling off low-cost businesses growth, but generating money at lower valuations, then buying more expensive things with higher growth, because that doesn’t necessarily create value. ”
Andersen, the former Danish CEO of Maersk Group and Carlsberg Brewery, was appointed chairman of Unilever in 2019 after four years on board, shortly after Jope, a veteran of the company, took over as CEO.
Unilever declined to comment.