Two of Unilever’s largest investors have called for a radical shake-up of the company or its board of directors in the wake of its failed bid of $ 50 billion. pounds for GlaxoSmithKline’s consumer health business.
Bert Flossbach, founder and investment manager at Flossbach von Storch, a € 80 billion. Cologne-based asset manager and a top-10 shareholder, said the FTSE 100 consumer group should consider revising its structure, which consists of three divisions for beauty, food and household products.
“Unilever should seriously consider splitting the company,” he said. “Talking about synergies between different companies is usually theoretical and designed to hold the status quo and less than the efficiency gains you would get from a split.”
Flossbach was previously among those calling on German carmaker Daimler to separate its extensive truck division from its Mercedes-Benz luxury car operation, which was completed this week.
“If you’re a food manager, you think differently than a household product manager or a beauty manager,” he added. “If you run these companies under one structure, capital allocation can become a problem. And you are very diverse in a negative sense because you do not know exactly what you stand for.”
Flossbach said one option could be to keep the food business under the Unilever name and separate other divisions. “You increase efficiency and strengthen the spirit of a company when it has a clearer mission. Cost savings are not enough in themselves. ”
Another top-20 shareholder called for the removal of Unilever’s chair, Nils Andersen, reflecting concerns that he and the board allowed CEO Alan Jope to make rising bids for the GSK division, a potential trade whose size and timing blinded investors and provoked a backlash.
The top-20 shareholder said a new chairman should be appointed outside the board. He added that a replacement for Andersen could then evaluate both Unilever’s strategy and whether Jope and its CFO Graeme Pitkethly were suitable for their positions.
Bruno Monteyne, an analyst at Bernstein, said: “Based on the discussions I have had with shareholders, I think there would be many people who are willing to support a credible switch to a new chairman.”
Continued dissatisfaction with shareholders is increasing pressure on Jope and Unilever’s board of directors, a few weeks after the Financial Times revealed that US activist Trian Partners has built up a stake in the company.
While Trian has not yet put forward his argument for change, analysts have suggested that the activist could push to split the food labels from his larger arm into household products.
Last week, Unilever announced a reorganization that cuts 1,500 management positions and divides the company into five divisions, including ice cream and nutrition. This could pave the way for spin-offs, according to Jefferies analyst Martin Deboo.
Hermann Soggeberg, chairman of Unilever’s European Works Council, said staff had been told there were no plans for significant divestitures, but that Trian’s involvement was a concern for employees fearing a split or more job losses.
The reorganization announced last week ”is a bit like we have gone in circles. We are now exactly where we started when I worked here 20 years ago, ”he said.
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However, analysts and investors disagree on whether a structural audit will create value for shareholders. The top-20 shareholder said Unilever should focus on improving the performance of the existing business before making major portfolio changes, while a top-25 shareholder said: “One thing I worry about is selling from low growth, but money-creating companies at low values. then you buy more expensive things with more growth, because it does not necessarily create value. ”
Andersen, the Danish former CEO of the shipping group Maersk and brewer Carlsberg, was appointed chairman of Unilever in 2019 after four years on the board, shortly after Jope, a veteran from the company, took over as CEO.
Unilever declined to comment.