The rise in shares of Unilever on Monday pushed their market value to £ 100 billion after the news that the activist hedge fund of Nelson Peltz Trian Partners has created a stake in the consumer goods group FTSE 100.
The Financial Times reported over the weekend that the $ 8.5 billion New York-based hedge fund, which had previously pushed for reform at Procter & Gamble and Mondelez, had bought Unilever, which is already under pressure after years of sales growth and lower share price performance. The amount of the bet is unknown.
Investors reacted positively to the news when markets opened, sending shares to Unilever, best known for brands such as Dove soap and Hellmann mayonnaise, up 6% to £ 38.94.
Martin Debou, an analyst at Jefferies, said: “We have long believed that the right way to unlock value at Unilever is through a faster rate of disposal from slow-growing food businesses or a split between food and [the household and personal care division], by selling or spinning [off]. We think Trian can take a similar view.
Unilever is already facing a tough week after the news that it has made three offers to GlaxoSmithKline’s consumer health department, offering as much as £ 50 billion – a move that has proved unpopular with many investors. He withdrew on Wednesday, saying he would not raise his bid.
Trian’s position raises the stakes for Unilever’s CEO, Alan Jope, who is facing an investor response to GSK’s consumer health bids. Fundsmith founder Terry Smith, a top 15 shareholder in Unilever, called on his management to focus on improving existing business instead of focusing on large acquisitions.
Smith and his research supervisor, Julian Robbins, wrote to their investors last week: which must be before taking on more challenges. “
The New York-based Trian was founded in 2005 by Peltz, Ed Garden and Peter May. He has a long history in the consumer goods sector and has led activist campaigns in particular at Mondelez International, Procter & Gamble and Sysco.
“The strength and temperature of the debate over Unilever now looks set to rise by several degrees, with Trian likely to find a sympathetic audience in the form of apparently disgruntled British owners of Unilever alone,” Debu added.