Unilever gains after activist investor Nelson Peltz builds stake

[LONDON] Unilever rose on optimism that Nelson Peltz will push the maker of Dove soap to improve its stock performance, after the activist investor's hedge fund amassed a stake.

The heat is now on chief executive officer Alan Jope to revamp his strategy.

Peltz's Trian Fund Management has bought a meaningful holding in London-based Unilever over the past few months, said sources who spoke on condition of anonymity. The exact size and Peltz's intentions aren't immediately clear.

The stock rose as much as 5.7 per cent in London. Jope was already reeling from a failed bid for GlaxoSmithKline's consumer-health unit and faces growing calls to chart a new course.

Billionaire Peltz is turning his attention to Unilever after retiring from Procter & Gamble's board in August, after nearly four years that brought several dramatic changes aimed at improving that consumer-goods giant's performance.

"The fox would now appear to be inside the henhouse," Jefferies analysts led by Martin Deboo wrote in a note to clients. "The force and temperature of debate around Unilever now looks set to rise by several notches." Trian will likely argue for splitting Unilever's food business from its household and personal-care operations, he wrote.

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 (S$91 billion) for the GSK health-care unit, which includes brands such as Advil and Sensodyne. GSK rejected the bid as too low, and Unilever later said it had no plans to raise the offer.

GSK has its own activist investor in the mix, with Elliott Investment Management pushing for changes. Trian, which was co-founded by Peltz, Ed Garden and Peter May, has a history of pushing for changes at consumer companies, including PepsiCo, Danone and Kraft Foods.

Unilever had a market valuation of about £94 billion pounds based on Friday's closing price. Its shares had declined about 6.9 per cent in a year.

CEO Jope's public defeat came after analysts implored him not to pursue the GSK unit. Fund manager Terry Smith called the bid a "near-death experience." Only days earlier, he had urged Unilever to focus more on fixing its own business rather than seeking to promote the sustainability ethos of brands such as Hellmann's mayonnaise.

The Financial Times first reported the Trian stake on Sunday. Representatives for the hedge fund and Unilever declined to comment. It remains to be seen whether Jope's setback with GSK will prompt the kind of radical changes implemented at Unilever after Kraft Heinz Co's failed bid to acquire Unilever in 2017 for US$143 billion. That debacle led Unilever to consolidate its headquarters in the UK, ditch a cumbersome Anglo-Dutch structure, and adopt a more aggressive acquisition strategy.

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