American businessman Peltz’s Unilever fight is easy; winning is harder

NEW YORK (Reuters) - Nelson Peltz is feeling his consumer goods swagger. The activist investor has taken a stake in Unilever.

Unilever Chief Executive Alan Jope is under fire after last week’s failed 50-billion-pound bid for GlaxoSmithKline’s consumer health business triggered a share price slump. Even after a Peltz-inspired bounce on Monday, the $127 billion company’s shares are down 2% in the past three years; P&G shares have risen more than 72% over the same period

The European company’s EBITDA margins, at 22%, are far lower than the 26% reported by its American rival, according to Refinitiv.

That makes Unilever a clearer activist target than P&G. The $390 billion US company was not obviously underperforming before Peltz started rocking the boat and not all shareholders supported him.

At one point the proxy vote was so close that P&G triumphantly declared victory only to be overruled a few weeks later. Still, the maker of Gillette razors and Pampers diapers has significantly outperformed rivals since, and Peltz mended fences with CEO David Taylor.

If Peltz successfully elbows his way into Unilever’s boardroom, though, the actual work may be more difficult. Separating food brands like Hellmann’s mayonnaise and Ben & Jerry’s ice cream from health and beauty products like Dove soap and Vaseline could unlock some value but would also come with operational and tax costs.

Besides, Unilever’s shortcomings require more than financial engineering. Its personal care and homecare businesses sold less by volume in the third quarter of 2021 than in 2020. Meanwhile the company’s beauty and personal care division – which Jope is eager to expand - was the slowest growing unit by sales in the first nine months of last year. Peltz will find it easier to hold management accountable. Declaring victory will require more elbow grease.