Has Unilever PLC (LSE:ULVR) scored the biggest own goal of the decade so far with its move on Glaxo’s consumer arm.
City watchers were today suggesting the answer might be yes as it emerged that US corporate raider and company restructuring specialist Nelson Peltz has taken a stake through his activist vehicle Trian Partners.
Unilever’s shares jumped 7% on the news, as investors hoped that his presence might shake the Marmite, Dove and Persil group out of a torpor that sees its share price 3% below where it was almost five years ago.
A 79-year old billionaire, Peltz has plenty of form when it comes to shaking things up at consumer brands businesses.
He targeted Cadburys in 2007 and joined the board of its new owner Mondelez (NASDAQ:MDLZ) in 2014 after pushing for its merger with PepsiCo (NASDAQ:PEP).
Heinz and Kraft Foods have also been in his crosshairs, while most recently he was embroiled in a bitter proxy fight in 2017 with Unilever’s main rival Procter & Gamble (NYSE:PG) that was settled with him taking a seat on the board.
Since the start of 2018, P&G’s share price has risen by around 56%, something that looks rocket-fuelled compared to its Anglo-Dutch rival.
He left the Fairy and Ariel maker in July last year with even P&G noting he had added considerable value to the business.
Peltz reportedly started to build his stake before Unilever inquired about buying Glaxo’s soon-to-be demerged consumer arm for £50bn, but whatever his intentions they will not have been harmed by the investor response.
In meetings about the deal, Unilever’s management was reportedly roundly criticised.
Bernstein's Bruno Monteyne said: "No investor backs this bid. Our investor call last night was a torrent of criticism along the lines of: 'what on earth are they thinking', 'how can the board even think …', 'desperation'."
Alan Jope, Unilever’s embattled chief executive, is due to give an update on strategy next month having previously indicated the plan is to sell off the laggards within its brand portfolio and newer faster-growing ones.
Whether he gets the chance is the debate at present.
READ: Unilever yet to demonstrate it would be the right owner of GSK's Consumer Healthcare division
On past evidence, the least Peltz will want is a seat on the board but analysts suggested a deeper more wide-ranging restructuring will likely be on the agenda.
Bernstein’s Monteyne said an obvious strategy would be to split Unilever or install new management.
Others suggested a spinning out Unilever’s food and refreshments business or a clear-out followed by a regroup around the best performers.
Either way, with the shares up 7% (to 3,928p) on a very bad day for the Footsie, the market is clearly betting that something is going to change.