Shares in Dove soap-to-Hellmann’s mayonnaise maker Unilever (ULVR) were the biggest risers on the FTSE 100 on Monday, rallying 6.2% to £39.04 on reports feared US activist Nelson Peltz has built a stake in the embattled packaged consumer goods group.

Peltz’s activist hedge fund Trian Partners has form in shaking up underperforming consumer goods companies and has reportedly taken an unspecified stake in Unilever, which has drawn the ire of shareholders following its failed pursuit of GlaxoSmithKline’s (GSK) majority-controlled consumer healthcare unit.

FOX IN THE HENHOUSE

The latest of three spurned offers was pitched at £50 billion but Unilever heeded the uproar from shareholders and effectively abandoned the bid, stating it wouldn’t increase its offer above £50 billion.

Nevertheless, the mooted mega-merger has raised questions over the group’s strategic direction under chief executive Alan Jope.

Trian’s arrival on the Unilever share register heaps further pressure on the beleaguered Jope, with Jefferies analyst Martin Deboo reported as saying the ‘fox would now appear to be inside the henhouse’.

Shares in the Marmite-to-Magnum ice cream maker rose as investors wagered New York-based Trian will agitate for change at the troubled Anglo-Dutch company.

Feared activist fund Trian has form in successfully unlocking value by calling for cost-cutting measures and governance reforms at the likes of Mondelez, Sysco and Procter & Gamble, the US giant behind brands including Pampers nappies, Gillette razors and Oral-B dental floss.

In 2018, Trian called for Procter & Gamble to simplify its corporate structure and Peltz was added to the board following a protracted proxy fight, before stepping down last year.

‘NEAR DEATH EXPERIENCE’

Last week, Terry Smith, the founder of Fundsmith, one of Unilever’s leading investors, described the abortive bid for the consumer healthcare unit as a ‘near death experience’ and advised management to focus on the core business or step aside.

Smith, the analyst turned investment chief turned fund management guru, had previously argued Unilever’s management has ‘lost the plot’, with the FTSE 100 goliath ‘labouring under the weight of a management which is obsessed with publicly displaying sustainability credentials at the expense of focusing on the fundamentals of the business’.

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Issue Date: 24 Jan 2022