FTSE 100: Unilever shares surge after adding activist Peltz to board
Shares in Unilever (ULVR.L) jumped by as much as 7.5% on Tuesday after activist investor Nelson Peltz joined its board, pledging to help boost the company’s strategy, operations, sustainability, and shareholder value.
The announcement sent the consumer goods giant to the top of the FTSE 100 (^FTSE) after months of the stock underperforming compared to the index.
Peltz, the billionaire chief executive of Trian Fund Management, will be joining the board as a non-executive director in July, just months after it first emerged that Trian had snapped up a stake in the business.
The fund is Unilever's fourth largest shareholder, with a 1.5% holding, equivalent to 37.4 million shares.
The $7.4bn (£5.9bn) investment firm has also previously mounted activist campaigns at Unilever’s rivals, including Procter & Gamble (PG), Heinz (KHC), and Mondelēz (MDLZ).
“The Investment Manager has informed the company’s board that it believes Unilever has significant potential and Trian looks forward to working collaboratively with Unilever’s management and board to help drive the company’s strategy, operations, sustainability, and shareholder value for the benefit of all stakeholders,” Trian said in a brief statement.
Unilever has been struggling recently in the wake of its failed takeover of GSK (GSK.L) Consumer Health.
Earlier this year, analysts said Unilever should opt for a break-up before an activist forces its hand. Peltz’s investment was widely seen to add further pressure on Unilever’s leadership under chief executive Alan Jope.
Read more: Unilever rules out upping £50bn bid for GSK unit
Unilever has been under increased pressure in recent years due to ongoing poor returns for shareholders. Its shares are still near a five-year low, despite a rally during the recovery from the coronavirus pandemic lockdowns.
“We already knew that Peltz’s hedge fund was accumulating a stake in Unilever after the consumer goods giant’s highly criticised and failed pursuit of GSK’s consumer healthcare division,” Victoria Scholar, head of investment at Interactive Investor said.
“Trian has a strong track record of creating value often by splitting businesses up into separate companies. CEO Alan Jope has faced a lot of shareholder criticism over his management decisions with fund manager Terry Smith saying he ‘lost the plot.’
“The introduction of Peltz to the board comes as a healthy shake up that could breathe new life into the shares.”