Daniel Loeb pressures Nestlé to reorganize
U.S. activist investor Daniel Loeb on Sunday ratcheted up pressure on Nestlé SA management to raise its financial returns and sell its stake in L'Oréal SA.
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In a letter to Nestlé's top management and a 34-page report, Daniel Loeb said that a raft of changes initiated by Nestlé in the past year-including a large share buyback, a marketing deal with Starbucks Corp. and investments in rapidly growing companies like Blue Bottle Coffee-have failed to satisfy the investor.
Mr. Loeb's Third Point LLC owns more than $3 billion in Nestlé stock, or about 1.25% of its shares.
"Nestlé's management is not moving quickly enough to exit underperforming and non-strategic businesses," Mr. Loeb said in a letter to Nestlé Chief Executive Mark Schneider and the board of directors. He blasted a "muddled strategic approach" that doesn't take into account changing consumer behavior.
Mr. Loeb said Nestlé should divest itself of as much as 15% of the sources of its sales and use the proceeds on acquisitions or buying back more shares. The time is right for adopting this strategy, he said, citing "this time of elevated multiples and strong strategic demand for some of its lower growth businesses."
He said the company has also been "unable to articulate a compelling strategic rationale for continued ownership" of its 23% stake in L'Oréal. (dpa)
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