NEW YORK: Activist investor Daniel Loeb’s Third Point LLC unveiled a stake of more than 1 per cent in Switzerland’s Nestle SA and urged the world’s largest packaged foods maker to improve margins, buy back stock and shed non-core businesses.
The 3.28 billion Swiss francs ($3.4 billion) stake is the largest ever taken by the hedge fund, which pressed for change in recent years at US Internet firm Yahoo and Japan’s Sony Corp. It said in a letter posted on its website that it had already had productive conversations with Nestle management.
Nestle shares jumped as much as 4.7 per cent on Monday morning, touching a record high as investors hoped for change.
“Nestle has arguably been lackadaisical and complacent and underperformed its potential,” Bernstein analysts said. “It might now be stirred into action by an external force.”
Third Point disclosed the Nestle position in a letter to the hedge fund’s investors, in which it argued the maker of Nescafe coffee and Perrier water should sell its 23 per cent stake in French cosmetics firm L’Oreal SA, which was worth about $27 billion on Friday. L’Oreal shares rose 2.8 per cent.
Nestle did not immediately respond to a request for comment. L’Oreal had no comment.
Nestle is the biggest player in a packaged food industry struggling with a slowdown in emerging markets, falling prices in developed markets and consumers demanding fresher, healthier products.
Mark Schneider, the company’s new chief executive, has been trying to reignite growth since joining Nestle in January from German healthcare group Fresenius. — Reuters
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