Activist Nelson Peltz to join Unilever board

Dive Brief:

• Unilever disclosed activist investor Trian Fund Management LP owns a 1.5% stake in the company, and it is adding Trian founding partner Nelson Peltz to its board, the company said in a U.S. Securities and Exchange Commission filing. 
• Peltz will join the board in July. In the SEC filing, he said Trian believes Unilever has “significant potential” and looks forward to working with management “to help drive Unilever’s strategy, operations, sustainability, and shareholder value for the benefit of all stakeholders.”
• Trian first bought its stake in Unilever in January, according to reports from The Wall Street Journal. It came following some tumultuous weeks when the company made an ultimately unsuccessful offer to buy GlaxoSmithKline’s consumer unit and said it may be looking to divest some or all of its food brands. The company since announced a restructuring and eventual layoffs of about 1,500 managers.

Dive Insight:

In 2022, Unilever has been at a crossroads. There are a few directions the sprawling company could move its business, and it makes sense that an activist investor like Peltz would want to take a hands-on approach to helping Unilever take advantage of the situation.

The markets certainly agree that Peltz could benefit Unilever. The company’s stock price rose nearly 8.6% following the news on Tuesday morning.

But what that means for Unilever’s food business is yet to be determined. After all, Unilever is a global leader in personal care and beauty, and home care and cleaning — and it has major brands in the ice cream and food space. When the company was making a play for the GSK division, Unilever leadership said that food and refreshments has had less long-term growth than other areas of its portfolio, and indicated they may be looking to divest some of these brands. 

Peltz’s addition to the Unilever board could hasten these changes. In a report cited by Seeking Alpha, Bank of America analysts believe that Peltz would hone in on sagging sales, and suggested the company reduce spend on its food and refreshments brands.

Many analysts say that Peltz is likely to bring to Unilever the game plan and lessons learned from four years on the board of non-food CPG titan Procter & Gamble. Part of the issues that company faced when Peltz came aboard are similar to those at Unilever — aging brands and a huge bureaucracy.

Peltz has a track record of pushing large food companies toward divestments or spin-offs. In 2008, with a 4.5% stake in the company, Trian was the impetus to split the former Cadbury Schweppes. Cadbury is now part of Mondelēz International, and the beverage arm became Dr Pepper Snapple, which is now part of Keurig Dr Pepper. In 2013, Trian — which took a stake in PepsiCo in 2012 — began a two-year push to split the company’s snacks and beverage businesses. Trian was not successful and sold its stake in 2016.

Activist investors have been able to use their posts to drive huge change in food businesses. Last year, pressure from activist investors including Artisan Partners Asset Management, Causeway Capital Management and Bluebell Capital Partners led to former Danone chairman and CEO Emmanuel Faber stepping down, as well as a complete overhaul of the dairy company’s board.

And last year, activist investor Jana Partners took a 7.5% stake in private-label food maker TreeHouse Foods and brought some affiliated board members to the company; its stake has since grown to 9.2%. Jana has gotten involved in many companies soon before they sold themselves, and that had been an option TreeHouse had been considering. TreeHouse has decided against a sale of the company, but is looking at potential divestitures.