Nestle Targeted By Activist Third Point
Billionaire activist investor Daniel Loeb's Third Point LLC hedge fund has taken $3.5 billion stake in Nestlé SA. The stake amounts to about 1.25% of Nestlé's shares.
Third Point outlined an array of changes it believes the consumer-goods giant could make, including improving margins, innovating in its core business and selling noncore assets and its 23% stake in French cosmetics company L'Oréal SA.
"Despite having arguably the best positioned portfolio in the consumer packaged goods industry, Nestle shares have significantly underperformed most of their US and European consumer staples," Third Point wrote in a letter to investors on Sunday night."It is rare to find a business of Nestle's quality with so many avenues for improvement."
Nestle owns about 23.2 percent of cosmetics giant L'Oreal, a stake with a market value of about $27 billion.
In addition, Third Point wants Nestle to scour its portfolio of more than 2,000 brands for possible sales and consider "accretive, bolt-on acquisitions in high growth and advantaged categories." The firm also called on Nestle to set a formal operating margin target of 18 percent to 20 percent by 2020. (dpa)
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