Nothing is more afraid of activist investors. Last week, billionaire Paul Singer dared to tackle Warren Buffett – a legendary investor on Wall Street – about the takeover of Oncor Electric. This week, it’s Nelson Peltz’s turn to openly attack Procter & Gamble (P & G), a consumer giant (Gillette razors, Pampers layers, etc.) that weighs $ 222 billion on the stock market . Never had a hedge fund coveted so great a prey. Never before has Nelson Peltz invested so much in a company ($ 3.3 billion). Its victory, if it materializes, will give wings to all these “hedge funds” have not ceased to increase their influence in recent years.
Nelson Peltz is showing a cautious sweet tooth for now: he claims only one seat on the board, for himself. He swears he has no intention of dismissing CEO David Taylor or splitting the group into two distinct entities – a common practice among activists who want to maximize their profit.
But his moderation does not pay, at least for now: P & G rejected his proposal last week. And Nelson Peltz will have to deploy a lot of energy to reverse the situation: although he bought $ 3.3 billion worth of shares, he owns “only” 1.5% of the company and is only Fifth shareholder. It will therefore have to convince many others to achieve its ends.
P & G’s underperformance could nevertheless help it: over the past ten years, the group has continued to disappoint on the stock market. Its shareholders have only won 4% in the last 12 months (including dividends), four times less than the S & P 500. Unable to reduce costs, the group has already been targeted by Bill Ackman. He had the head of the CEO of the time, but failed to maximize the profit of the shareholders.
The group has nevertheless reduced its spending by 10 billion since 2012. It has abolished 24,000 jobs, closed a dozen factories and arrested a hundred brands. He promised $ 10 billion in additional savings annually by 2021. But this is not yet fully reflected in the accounts: the group generated net income of $ 13.4 billion last year, Less than five years ago ($ 13.8 billion). Nelson Peltz, who has already played “cost killers” in many consumer groups (Heinz, PepsiCo, Mondelez), calls for a horse treatment at P & G.