Activist investor pushes Nestlé to sell $27B L'Oréal stake
June 27, 2017
Activist investor Third Point is looking to leverage its $3.5 billion stake in Nestlé by pressing one of Europe’s most valuable companies to divest non-core assets like its $27 billion stake (about 23%) in L'Oréal and double its debt to increase capital for stock buybacks.
Founded in 1995 by Daniel Loeb, the hedge fund reportedly started amassing its stake in Nestlé at the end of 1Q, growing its investment to 40 million shares, or 1.3% of the company. Loeb, meanwhile, met Nestlé CEO Mark Schneider in Switzerland earlier this month, and senior managers with the fund are slated to sit down with Nestlé leadership in the coming weeks. The move coincides with Nestlé’s decision to explore strategic options for its US confectionery business, with the review to cover the division's US market only.
Nestlé's US confectionery business had sales of around CHF900 million in 2016 and includes the Butterfinger and Crunch brands. With sales of CHF26.7 billion last year, the US represents Nestlé's largest market. Shares in Nestlé (SIX: NESN) gained more than 4% Monday.