Activist hedge fund Third Point targets Nestle

Swiss food and drink giant Nestle has become the latest target for activist US hedge fund Third Point, which has taken a one percent stake in the company and demanded major changes, including offloading its large holding in L’Oreal.

Third Point has a reputation for aggressively pushing for change at target firms, including Sony and Yahoo!, and gave a stinging assessment of Nestle’s performance in recent years as it announced its acquisition on Sunday.

Third Point said it had acquired one percent in Nestle, worth $3.5 billion (3.1 billion euros), in a letter to investors on Sunday that lamented the Swiss conglomerate’s company’s recent underperformance in comparison with its rivals.

The letter said that despite having “arguably the best positioned portfolio in the consumer packaged goods industry”, shares in Nestle -- whose brands include Nescafe coffee and Perrier water — had significantly lagged most of their US and European competitors. “It is rare to find a business of Nestle’s quality with so many avenues for improvement,” Third Point said.

The conglomerate’s longstanding target of growing sales by five to six percent a year, the so-called “Nestle model”, has struggled over the last four years in the face of a slowdown in emerging markets and weak consumption in Europe.(AFP)