Ditch ‘skin health unrelated to core business’, suggests Nestle's activist investor
Speaking in a recent investor presentation document following the Swiss giant’s sale of its US confectionary unit, Loeb said he expects the "decisive disposal of other ill-fitting businesses''.
"Nestle has an opportunity to move with greater urgency to complete its targeted level of portfolio adjustments", Loeb said. The investor specifically mentioned a review of the company’s stake in cosmetics behemoth L’Oréal should be on the cards.
Unrelated to core business: skin health a ‘costly mistake’
Loeb’s Third Point fund took at USD 3.4bn stake in Nestlé last year, and since then the investor has been pushing for change at the consumer goods giant.
His recent intervention suggests more decisive change could be on the cards for Nestlé, with Fortune noting last year that the company had been responsive to his demands so far.
"We would also like Nestle to better explain to shareholders the rationale behind expanding further into consumer health care,'' Loeb’s presentation document said.
It added: “forays into skin health seem unrelated to Nestle's core business and like a costly mistake that should be unwound.
"Nestle defines itself as a company focused on nutrition, health, and wellness, but many of its assets do not align with that vision.”
Speaking to Just-Food, Jon Cox, an analyst covering Nestle at French finance house Kepler Chevreux, said Loeb's letter is "less conciliatory than before, when he commended Nestle's efforts in terms of a margin target and commitment to portfolio change under new CEO Mark Schneider.”
The analyst suggests, though, that Loeb’s latest intervention may actually prove supportive of Schneider’s overall aims: "we view pressure from Loeb as actually helpful for Schneider's efforts to modernise and regenerate the organisation."
