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What Course Will the Acquisitive Alan Jope Chart for Unilever?

Unilever's new ceo has a long road ahead, appeasing ornery shareholders and mapping out a future for the giant that made a major misstep this year.

LONDON — Avid motorcyclist Alan Jope is looking down one long, winding — and potentially treacherous — road as the new chief executive officer of Unilever.

Jope, 54, is president of beauty and personal care, Unliever’s largest single division, which notched 5.2 billion euros in revenues in the third quarter. He may be a company lifer who’s acted internationally for the maker of Dove, Lipton and Vaseline for more than 30 years — but much of what lies ahead of him is unexplored territory.

The genial, straight-talking Scotsman had been a front-runner for ceo, but no one expected the appointment to come so quickly: Although Unilever began its search for ceo Paul Polman’s successor roughly a year ago, he wasn’t expected to step down for another six months or so.

Jope’s first order of business will be to repair relationships with Unilever’s big institutional shareholders after Polman’s botched plan to simplify the corporate giant’s dual structure and move the company fully to the Netherlands.

He’ll then have to come up with a new strategy for Unilever’s future now that shareholders want to keep it headquartered in London and Rotterdam, and retain its listings on stock markets in the U.K. and the Netherlands.

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“At this stage we think his main challenge is probably convincing investors that continuity, instead of big change, is the best way for shareholder value creation. Some investors are [still] waiting for a stronger shift toward home and personal care through M&A or Food disposal,” said Pierre Tegner, sell-side analyst at Oddo Securities.

Tegner said Jope’s appointment was probably the most “consensual scenario,” and he was the most credible internal candidate as head of the most attractive business within Unilever. “Jope’s nomination should be positively received and supports a scenario of continuity,” Tegner said.

In his new role Jope will also have to fortify the company further against hostile bids, such as the $143 billion surprise swoop last year by The Kraft Heinz Co. The move, which Unilever successfully rebuffed, nonetheless rattled the corporate giant, forcing it to slim down and restrategize. Following a rapid strategic review this year, Unilever has put the focus firmly on food and beauty, sold its struggling spreads business and fused the food and refreshments divisions.

Basing itself fully in the Netherlands was also part of the new strategy: Unilever trades publicly both as Unilever plc in London and as Unilever NV in Amsterdam. Polman and the board believed a single corporate structure would create a simpler, more agile and more focused company with increased strategic flexibility for “value-creating portfolio change.”

Alas, it was not to be: The big shareholders — Columbia Threadneedle, Schroder Investment Management, Legal & General and others — were worried about the potential tax implications of holding shares in the Netherlands and the consequences of Unilever’s delisting from the London Stock Exchange, where it’s an FTSE 100 company with a market capitalization of about 50 billion pounds. Unilever’s shares closed down 0.1 percent at 42.55 pounds on the London Stock Exchange Thursday. In Amsterdam they were down 0.5 percent to 48.96 euros.

Following the announcement of his appointment Jope said: “Our focus will remain on serving our consumers, and our other multiple stakeholders, to deliver long-term growth and value creation.”

Tegner of Oddo Securities said some investors will be disappointed that an external candidate didn’t get the top job.

Dave Lewis, ceo of U.K. supermarket giant Tesco who preceded Jope as head of Unilever’s personal-care division, was said to be in the running, as was Wang Lin Martello, who had held top international jobs at Nestlé.

Now that the c-suite is filled, industry insiders are betting that Unilever will tap another internal candidate to fill Jope’s role at beauty and personal care. That person will likely be someone in hair care, a thriving business within the division, or a big regional manager.

Unilever said Jope’s successor will be revealed shortly. Polman will retire as ceo and as a board member on Dec. 31. He will support the transition process in the first half of 2019 and will leave the company in early July.

Candidates for Jope’s job could include Chris Barron, vice president of personal care who has worked in the division for the past 15 years with hair-care brands TRESemmé, Toni & Guy and V05. He most recently led the TRESemmé brand as global brand vice president.

Gemma Cleland, vice president of home care, who joined the Unilever board in 2015 and who manages market activation for brands such as Persil, Comfort, Domestos and Cif, could also be in the running, along with Andre Burger, vice president of brand building, foods and beverages.

Hanneke Faber, president, Europe, will most likely be on the list as will Amanda Sourry, president of North America and global head of customer development. Paul Fenwick, vice president, finance U.K. and Ireland, may also be a candidate. He’s helped to complete a number of deals, including the acquisition of Dermalogica and The Dollar Shave Club.

If the company did want to look outside its walls, it could turn to Adil Mehboob-Khan, an FMCG veteran who is now ceo of department store Liberty London. Mehboob-Khan is the former president and ceo of Wella and has held top roles at Procter & Gamble, notably as vice president, beauty, Europe.

With Jope in the top job, it remains to be seen whether the rapid-fire growth of Unilever’s beauty and personal care operations will continue: Jope was virtually unstoppable, making a series of rapid-fire acquisitions — most of them at the top end of the market — since he took over the role in 2014.

Indeed, Unilever has made 24 acquisitions since 2015, most of them in beauty and personal care including Living Proof, Dermalogica, SheaMoisture, Carver Korea, Italy’s Equilibra, Ren and Kate Somerville.

Polman was fully behind all of the purchases, pointing out earlier this year that by 2019 the acquisitions would contribute an additional 3.5 billion euros to turnover and 1 billion euros to e-commerce.

In a 2015 interview with WWD, Jope said he was eager to bring top-tier brands into the Unilever portfolio as quickly as possible, and his strategy from the get-go has been to capitalize on the company’s core strengths in skin care and hair care by moving into premium acquisitions.

“We don’t want to play in prestige just as a niche activity. We want to build it into a big business,” Jope told WWD at the time. “This is a growth play for us in two regards. Number one, it is a faster-growing segment, no matter what time period or geography you look at. Secondly, it’s all white space,” he continued. “If we launch another mass-market shampoo or skin cream, there will be an element of cannibalization. But as we step into the prestige business — that is all incremental for us.”

In the third quarter, the beauty and personal care division saw underlying sales growth of 4 percent, helped by improved price growth, according to Unilever.

Prestige brands saw double-digit growth boosted by Hourglass, Kate Somerville, Living Proof and Ren. Love, Beauty & Planet, the largest of the division’s new brand launches, branched into deodorants and skin care while another new brand called K-Bright was launched in Southeast Asia to address the fast-growing Korean beauty trend.

Despite the growth of prestige, UBS wrote in a flash report Thursday that Jope’s M&A strategy would likely come up for debate.

“Unilever has been a prolific acquirer of small assets, and Unilever has also entered the prestige beauty category, but it has yet to scale it up. With Mr. Jope appointed as the new ceo, we would expect investors to debate the merits and the shortcomings of such an M&A strategy more openly,” the bank wrote following the announcement of Jope’s appointment.

Jope was recruited out of college by Unilever, and before becoming head of beauty and personal care he served as president of Russia, Africa and the Middle East and has lived in Thailand, Shanghai, Singapore and the U.S., among other places.

His unpretentious demeanor — his daily uniform consists of jeans and Nikes and he carries a backpack rather than a briefcase — belies his rapid ascent to the upper echelons of management within the otherwise conservative hallways of Unilever, but he’s clearly been able to adapt to Unilever’s international mind-set, both personally and professionally.

Now the question is whether he’ll actually put on a suit as he proves to shareholders that he’s the man for the job.