Khan is a professional trader and business writer with over 7 years of experience in several financial markets. Khan takes pride in sharing insightful articles with his readers that help them improve their investment portfolios.

2022-05-31 19:29

Unilever Inc. stock closed nearly 8.0% up on Tuesday after the consumer goods company appointed Nelson Peltz – an activist investor as its non-executive director.

With sales in over 190 countries and goods used by 3.4 billion people every day, Unilever is one of the globe's major suppliers of Beauty & Personal Care, Home Care, and Foods & Refreshment products. In 2021, they had 48,000 workers and sales of €52.4 billion.

The $95 billion company that trades at a PE multiple of 18.89 is still down roughly 7.0% year-to-date.

Peltz to start on July 20th

Peltz will join the board on July 20th, according to the company. After years of relative low performance, shareholders have long advocated for more outside influence on the company's strategy, and today’s announcement represents a significant concession to them.

In the press release, Unilever’s Chairman Nils Andersen said:

"We have held extensive and constructive discussions with him and the Trian team and believe that Nelson's experience in the global consumer goods industry will be of value to Unilever."

Mr Peltz has a history of investing in consumer products companies, such as Cadbury, Pepsi, Schweppes, and many other. He has also served on the boards of notable names like Procter & Gamble, Heinz and Mondelez. David and Victoria Beckham's son is married with one of his daughters.

Peltz owns 1.5% of Unilever

The announcement comes after Unilever made three failed attempts to buy GlaxoSmithKline’s consumer healthcare segment for as much as $63 billion. Unilever's stock has been on a negative trend since July of last year. It continued to plummet after the company warned that rising inflation will squeeze profit margins this year.

Peltz, who leads the Trian hedge fund in New York, is recognised for his interest in consumer-oriented businesses and for suggesting operational changes at the hedge fund's portfolio companies. Peltz's Trian fund owns about 1.5% of Unilever plc, making it the company's fourth-largest stakeholder. In a statement, Peltz said:

"We look forward to working collaboratively with management and the board to help drive Unilever's strategy, operations, sustainability, and shareholder value.”

Unilever has so far slashed expenses by consolidating its headquarters in London and eliminating several slower-growing businesses, such as its Lipton tea brand. The business, which employs around 148,000 people globally, has also announced intentions to slash approximately 1,500 managerial jobs as part of a restructure to form five product-focused divisions, similar to P&G's reorganisation three years ago.