Activist investor Nelson Peltz to join board of Unilever

Activist investor Nelson Peltz has joined the board of consumer goods group Unilever after acquiring a 1.5 per cent stake, sending shares in the company higher.

The appointment of the Trian Fund Management founder has heightened expectations of a drastic overhaul at Unilever, which faces discontent among its broader investor base over lacklustre performance and a failed attempt to buy GlaxoSmithKline’s consumer health division.

The maker of Magnum ice cream, Dove soap and Axe deodorant said Peltz would join as a non-executive director on July 20 and also become a member of the group’s compensation committee.

The elevation of Peltz to the board is the latest in a series of interventions in the consumer goods sector by the activist investor, who has previously sat on the boards of Procter & Gamble, Heinz and Mondelez.

The Financial Times reported in January that Peltz’s $8.5bn fund had taken a position in the UK company. Unilever disclosed on Tuesday that Trian holds a 1.5 per cent stake, making it the group’s fourth-largest shareholder, according to data from Refinitiv.

Trian had made a “considerable investment” in Unilever, Peltz said, adding that he was looking forward to “working collaboratively” with the group’s management.

“We believe it is a company with significant potential, through leveraging its portfolio of strong consumer brands and its geographical footprint,” he said.

Bruno Monteyne, analyst at Bernstein, said Unilever was suffering from its presence in “structurally low-growth categories” along with “a loss of investor confidence regarding management and the board”.

Shareholder discontent erupted earlier this year following news of Unilever’s attempts to buy GSK’s consumer health division, soon to be spun off under the name Haleon, for £50bn.

But investors were already disillusioned with Unilever’s languishing performance. Before the jump in its share price early on Tuesday, its shares had lost 16 per cent since chief executive Alan Jope took over in 2019. Shares in the group rose as much as 7 per cent in early trading on Tuesday before falling back to 5.3 per cent above their opening price, at £36.80.

Peltz’s arrival adds to pressure on Jope and the company’s chair, Nils Andersen. Monteyne said Peltz was likely to focus on “back to basics” changes such as “investing in innovation, fixing incentive schemes [and] accelerating the pace of acquisitions and disposals”.

Peltz stepped down from the board of P&G last year, four years after he had acquired a $3bn stake in the company.

James Edwardes Jones, analyst at RBC Capital Markets, said: “At P&G, we believe Nelson Peltz stimulated changes to culture, remuneration and organisational structure. Although he isn’t completely responsible for the much-improved company P&G is today, he was a factor.

“We hope his presence can motivate similar changes at Unilever as well as drive cross-investor engagement.”

Monteyne noted, however, that P&G had not taken Peltz’s advice to split into separate operating units. “In the case of Unilever, we think that makes a lot more sense as it may simply be too spread out to be run effectively,” he said.

Unilever announced in January that it would restructure the company into five divisions and cut about 1,500 jobs following news of Peltz’s stake. It has also been facing a steep rise in costs.

It has also faced criticism from some investors for its focus on sustainability and “purpose-led” brands. Top 10 shareholder Terry Smith, of Fundsmith, said it had “lost the plot” after seeking to define the purpose of brands such as Hellmann’s mayonnaise.

Peltz said on Tuesday he would look to help “drive Unilever’s strategy, operations, sustainability, and shareholder value for the benefit of all stakeholders”.