Updated 6/1/2022: Shares of Unilever (NYSE: UL) (GB: ULVR) are up nearly 10% on the news that the conglomerate is adding activist investor Nelson Peltz to its Board of Directors.
Based out of London, Unilever is one of the largest fast-moving consumer goods companies in the world. UL stock has lost 8.8% in 2022 to date.
Why did Unilever Add Nelson Peltz to its Board?
In January, Peltz’s New York-based hedge fund, Trian Partners, disclosed its initial stake in Unilever. To date, Trian has confirmed a 1.5% stake in UL, making it the fifth largest shareholder. Following this, the Board has appointed Peltz as a non-executive director and member of its Compensation Committee, effective July 20, 2022.
Unilever is facing immense pressure to display its prowess since it has underperformed compared to its peers during the pandemic. The company has even decided to cut jobs and reorganize to help smoothen procedures.
Peltz is known for his acumen for successfully restructuring companies and helping drive significant shareholder value. No wonder the board has bowed to the hedge fund’s pressure to accept his Board nomination in an attempt to navigate through difficult times.
Commenting on the news, Nils Andersen, Unilever’s Chairperson, 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 as we continue to drive the performance of our business.”
Meanwhile, Peltz commented, “We believe it is a company with significant potential, through leveraging its portfolio of strong consumer brands and its geographical footprint… 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.”
In the past, Peltz has served on the Boards of other similar companies and undertaken proven turnarounds in Procter & Gamble (PG), H.J. Heinz, and Mondelez International (MDLZ).
Trian is also the largest shareholder of hamburger chain Wendy’s (WEN) for which the fund is seeking potential business combination solutions including merger, consolidation, tender offer, or similar transaction.
Unilever Stock Prediction
The Wall Street community has a Hold consensus rating based on three Buys, seven Holds, and three Sells. The average Unilever price target of GBp 3,873.99 implies 1.3% upside potential to current levels.
Concluding Note
Going by Nelson Peltz’s historical record, the investor has a proven record of turning around a company for the best. Taking a seat on Unilever’s Board implies that the consumer goods company is set for a long-term growth trajectory, which is also witnessed by positive shareholder sentiment.
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