LONDON — Activist investor Nelson Peltz gave a jolt to Unilever shares on Tuesday after the consumer giant confirmed his appointment as a non-executive director and a member of its compensation committee following an investment of nearly $2 billion.
The share price soared more than 7 percent shortly after Unilever, parent of brands including Dove, Vaseline and Magnum, revealed the news early Tuesday. The shares closed up 6.7 percent at 37.30 pounds on the London Stock Exchange.
Peltz is the billionaire chief executive officer and a founding partner of Trian Fund Management, an activist hedge fund. Trian owns about 1.5 percent of Unilever’s share capital, worth around $1.64 billion, according to Bernstein.
The markets had been expecting Trian to take a stake in Unilever earlier this year following the consumer giant’s botched attempt to purchase GlaxoSmithKline’s Consumer Health business.
The move irked shareholders, tarnished the image of CEO Alan Jope and saw Unilever’s share price collapse. Financial analysts were hoping that Peltz would join the board at some point and start working with management, as he did with Procter & Gamble a few years ago.
For C-suite executives, advice from Peltz is like castor oil: hard to swallow, but beneficial in the long run.
Peltz muscled his way onto the board of Procter & Gamble and served there from 2018 until August 2021. He worked alongside the then-CEO David Taylor and management and ultimately helped to improve the conglomerate’s fortunes.
He’s known for rolling up his sleeves and working actively with executives to turn companies around. He has also served on the boards of food and beverage conglomerates H.J. Heinz Company and Mondelez International.
Peltz, whose appointment is effective from July 20, said he was “delighted” to be joining the board of Unilever.
“We believe it is a company with significant potential through leveraging its portfolio of strong consumer brands and its geographical footprint. Trian has made a considerable investment in Unilever. We look forward to working collaboratively with management and the board to help drive Unilever’s strategy, operations, sustainability, and shareholder value for the benefit of all stakeholders.”
Unilever chair Nils Andersen said the company has already held “extensive and constructive discussions” with Peltz and the Trian team, and believes that “Nelson’s experience in the global consumer goods industry will be of value to Unilever as we continue to drive the performance of our business. We look forward to working closely together to create long term sustainable value for our shareholders and wider stakeholders.”
James Edwardes Jones of RBC Europe said that at P&G, Peltz “stimulated changes to culture, remuneration and organizational 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. It should also raise the media profile of Unilever’s ongoing changes and drive accountability.”
Edwardes Jones said his hope is that Peltz can “stimulate positive changes to culture, remuneration and organizational structure [at Unilever] like he did at P&G. If not that, at least the presence of an activist investor can drive collaboration amongst Unilever’s other shareholders and raise Unilever’s profile in the media to increase accountability of ongoing changes.”
On Tuesday, Bernstein, the global asset management firm, said Peltz “brings a huge amount of credibility” to Unilever and is expecting the shares should do “very well” in the short term.
Bernstein believes that most of Peltz’s work at Unilever will count as “back to basics,” such as investing in innovation, fixing incentive schemes and accelerating the pace of acquisitions and disposals.
It is also expecting Peltz and the Trian team to encourage a split of Unilever into independent operating units. “We think that makes a lot more sense as [Unilever] may simply be too spread-out to be run effectively,” Bernstein said.
Peltz’s arrival coincides with Unilever’s acquisition this week of Nutrafol, a maker of wellness products and the top dermatologist-recommended hair-growth brand in the U.S.
Its product range addresses issues such as thinning hair and compromised hair health for women and men of all ages. Unilever already held a 13.2 percent share in the company through Unilever Ventures, its investment arm.
Hair care is among the hottest product categories in beauty today, with investors homing in on the segment. Giorgos Tsetis, cofounder and CEO of Nutrafol, said Unilever will contribute resources and enable scale.
In February, amid widespread reports in the British press that Trian was building up a stake in Unilever, Jefferies said the fund has proven over time to be “notably well-informed analysts of their portfolio companies and ‘constructivist’ in approach.”
The bank speculated that Trian would likely push Unilever to make some quick brand disposals in the slow-growing foods business, or split the food and personal care divisions altogether, via a sale or a spin-off.
Peltz’s personal life is as colorful as his professional one: The forthright investor is also the new father-in-law of Brooklyn Beckham.
His daughter Nicola, an actress and director, married Beckham earlier this year at the family’s Montsorrel family estate in Palm Beach, Fla., with festivities, celebrity performances and a star-studded guest list. Peltz asked guests to make donations to Ukraine in lieu of wedding gifts.
— With contributions from Jennifer Weil