Nelson Peltz Fund Secures Stake in Unilever, Seeks Changes in Company
Unilever failed to acquire GlaxoSmithKline. Now, a Nelson Peltz-led activist fund wants to change things at the conglomerate. What changes might be coming?
Jan. 24 2022, Published 12:15 p.m. ET
Trian Fund Management LP, an activist investment firm helmed by billionaire Nelson Peltz, acquired a stake in Unilever (NYSE:UL). Unilever, a multinational consumer goods company, recently failed in an attempt to acquire GlaxoSmithKline’s consumer health business.
Here’s what we know about Peltz’s recent stake in Unilever and what the activist investor hopes to change at Unilever amid a pivotal moment.
Billionaire investor Nelson Peltz’s firm gets stake in Unilever after failed GSK bid.
Trian Fund has acquired a stake in Unilever, a company with a nearly $138 billion market cap as of Jan. 24. The size of the stake is unknown, but Peltz is using it to advocate for changes he hopes to see in the company.
What we do know is that the position entrance comes shortly after Unilever failed to acquire the consumer health leg of GlaxoSmithKline (GSK). Unilever proposed $68 billion to get a portion of GSK’s business, but GSK didn’t accept the offer. GSK thinks that Unilever undervalued the business and its future prospects.
The failed GSK bid only added to Unilever’s problems. The conglomerate was already facing quelled volumes, and UL stock dropped 12.9 percent in the 12 months ending Jan. 24.
Trian Fund has a history of investor activism in consumer goods.
Peltz’s Trian Fund is already invested in Unilever competitor Procter & Gamble (NYSE:PG). Through Trian’s investment, Peltz narrowly landed a board seat at P&G in 2017. It was a costly proxy war, but a successful one nonetheless.
Trian Fund now wants to gain similar influence at Unilever, and ultimately increase share value beyond its current levels hovering around 2017 lows. Unilever CEO Alan Jope has only been in his position since January 2019, but UL stock value hasn’t grown since then.
What does Trian want to change at Unilever?
If Peltz manages to get a board seat at Unilever, he could sway the vote for future corporate decisions as a way to increase shareholder value.
Neither Peltz nor Trian has come forward with a specific call for change at Unilever. However, it’s clear that the activist investor group believes Unilever needs to redirect. Trian describes itself as a “highly engaged shareowner, bringing a private equity mindset to the public markets.” This means Trian specifically invests in high-quality, undervalued, and underperforming public companies.
The firm works collaboratively with these companies’ management teams and boards with the goal of helping companies achieve long-term sustainable earnings growth.
Jefferies analyst Martin Deboo told The Wall Street Journal, “The force and temperature of debate around Unilever now looks set to rise by several notches, with Trian likely to find a sympathetic audience.”
UL stock is up amid the Trian investment.
Investors seem happy about the Trian Fund stake in Unilever. UL shares are up 7.21 percent as of late morning on Jan. 24. This comes after a 14.5 percent drop in response to Unilever’s failed bid for GSK’s consumer health business. Investors will want to stay tuned to find out what Trian hopes to change at Unilever to determine long-term stock viability.