Activist investor Nelson Peltz buys stake in Unilever

LONDON—Trian Fund Management LP, the activist hedge fund run by Nelson Peltz, has acquired a stake in Unilever UL -0.18%

PLC, according to people familiar with the matter, is adding pressure on the packaged food and consumer goods giant following its failed $68 billion bid for GlaxoSmithKline GSK 0.49%

PLC’s consumer healthcare business.

The size of the stake could not be learned. Trian started buying Unilever shares long before its bids for the GSK unit surfaced earlier this month, one of the people said.

Unilever shares have been under pressure in recent months as it struggled to boost volumes. Analysts say it has underperformed some rivals during the pandemic in areas such as hygiene and packaged food and hasn’t launched any successful innovations for some time.

The company has faced strong opposition from investors to its plan to buy GSK’s healthcare business, with analysts pointing to its mixed track record on several other major acquisitions. Critics said the London-based company was paying too much for the GSK business and should focus on fixing its existing categories rather than new categories in which it had little experience.

Trian’s stake in Unilever has already been reported by the Financial Times.

Late last year, Unilever chief executive Alan Jope launched the effort to buy the consumer healthcare business that GSK said it was preparing to spin off. Unilever said the deal would be part of an effort to push health, beauty and hygiene products further away from slower-growing food brands. The supply and pivot to health represented Unilever’s biggest strategic shift in years. He said at the time that any major acquisition would likely be accompanied by major divestments.

But the effort fizzled amid intense opposition from Unilever shareholders, while GSK held out for a better price. Last week, Mr Jope said he would not lift Unilever’s latest offer, essentially putting the deal on ice. Unilever said it was committed to improving the performance of its existing brands, including through an upcoming reorganization, and pivoting its portfolio into higher-growth categories.

Some analysts and investors say Mr. Jope’s credibility took a hit from the episode.

Trian’s involvement comes a few years after the New York-based company bought out Unilever rival Procter & Gamble Co.

In 2017, Mr. Peltz narrowly won a seat on the P&G board, in what was at the time the most expensive proxy battle in US history.

Mr. Peltz has previously served on the boards of other consumer goods companies, including Oreos maker Mondelez International Inc.

and Heinz. In some past activist campaigns, he has sought to break up companies, although that was not a goal in his involvement with P&G.

Analysts and investors have called on Unilever to revive its own sales growth in a manner similar to P&G’s turnaround, including divesting slower-growing brands and revolving around its core business.

P&G, at the time of Mr. Peltz’s involvement, was struggling with intense competition, rising material costs and its own bureaucracy. The Cincinnati-based company has since successfully upgraded consumers to higher-end versions of its products. It also ditched mass-market beauty brands and led the industry to raise prices to offset commodity costs and fatten profit margins.

More recently, P&G has benefited from strong sales gains made thanks to the pandemic, in particular thanks to higher prices. At the end of last year, Mr. Peltz left the P&G board.

Write to Cara Lombardo at [email protected], Saabira Chaudhuri at [email protected] and Costas Paris at [email protected]

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