Billionaire investor Daniel Loeb on Sunday stepped up pressure on food group Nestle SA, in a letter that urged its board to be “sharper,” “bolder” and “faster” in spinning off businesses and untangling its complex management structure.
“This is a call for urgency – rather than incrementalism,” said Loeb’s letter. It came with a 34-page presentation with recommendations and critiques. Third Point, the $18 billion hedge fund which has invested more than $3 billion in Nestle, also launched website www.nestlenow.com to push its case.
Loeb’s letter, seen by Reuters, demanded that Nestle spin off more businesses that do not fit its strategy including ice cream, frozen foods, and confectionary; divide itself internally into three divisions – beverages, nutrition and grocery; and add an outsider to the board with expertise in the food and beverage business.
Each division should have its own CEO, regional structure and marketing heads, Loeb said. This would “simplify (Nestle’s) overly complex organizational structure,” the letter said.
Nestle had no immediate comment on the letter, which was first reported by the Financial Times.
Loeb’s demands came roughly on the first anniversary of his investment in Nestle and at a time of significant merger activity in the food industry. For months, the activist investor who previously pushed for change at Yahoo and Dow Chemical as well as other companies watched and periodically made supportive public comments about Nestle’s new chief executive officer, Mark Schneider.
But his letter made clear that Third Point is no longer willing to keep its critiques behind closed doors.
It criticized Nestle’s slow sales growth, declining stock price and its failure to sell off more pieces that do not fit its “nutrition health and wellness” strategy.
The fund manager’s biggest concern was corporate structure, with the board of directors in charge of strategic direction.
“Nestle’s insular, complacent, and bureaucratic organization is overly complex, lethargic, and misses too many trends,” Loeb said in the letter.
In early 2017, the Swiss company hired Schneider, a German, as its first non-Swiss CEO in nearly a century. He had won praise for overhauling Fresenius Medical Care.
But former CEO Paul Bulcke remained Nestle’s board chair, which raised eyebrows among governance experts. Insiders say that after months at the helm, Schneider has yet to bring in a broad team of his own.
Industry experts say CEOs sometimes privately welcome public critiques from big shareholders, as effective cover to push through changes more aggressively. Loeb has only put together websites twice before – at Yahoo and Dow Chemical, but he has been vocal at plenty of companies and most recently pushed for United Technologies to break itself into three companies.
By Svea Herbst-Bayliss and Rama Venkat Raman
Source: Reuters
After eight years with Nestlé, François-Xavier Roger, executive vice president and chief financial officer (CFO), has decided to leave the company to pursue new professional challenges, making way for finance boss Anna Manz. Meanwhile, Unilever announced that Graeme Pitkethly, CFO, will retire by the end of May 2024, and the hunt is on for his successor.
International spirits company Bacardi Limited has announced the appointment of Alicia Enciso to its board of directors. Enciso joins with more than 30 years of experience with multinational Fortune 100 Companies in the food and beverage sector with roles as general manager, president, chief marketing officer and e-business officer.
According to Innova Market Insights, when it comes to beverages, consumers are willing to pay more for what they value most, despite rising inflation. Additionally, consumers want brands that respond to their core values and have the benefits they seek, such as sustainability and functional ingredients.
