Is a break-up on the cards after years of share price decline?

NELSON Peltz’s appointment to the board of Unilever sparked speculation over the future of the company.

After years of share price decline and a series of setbacks, analysts said the activist investor was likely to use his position to push for a shake-up of the consumer goods business.

The 79-year-old New Yorker – who will take up his position as a non-executive director and a member of the Unilever compensation committee next month – could even call for Unilever to be broken up, experts suggested.

Bernstein analyst Bruno Monteyne said Peltz has a ‘very strong record’ and ‘huge credibility’ thanks to his involvement with other firms in the sector including Cadbury and Procter & Gamble.

He said he did not expect Unilever to ditch its focus on ‘woke’ issues despite criticism from other shareholders including Terry Smith, who said chief executive Alan Jope has ‘lost the plot’.

But Monteyne said: ‘I would expect more energy behind executing and improving their strategy. I would also expect more board and management changes.’

He said Peltz could help Unilever improve its incentive scheme for bosses, boost investment in innovation and branding and buy ‘more interesting’ assets while selling off bad businesses.

He also said Peltz could oversee the sale of entire divisions. ‘One thing Peltz proposed at P&G, but that was not executed, was to split the company into independent business units,’ he said. ‘I think that idea will come back for Unilever. They may simply be too big to turn around, and breaking them up may improve agility.’

UBS analyst Guillaume Delmas also said Peltz’s arrival raised the prospect of sales and takeovers, including a separate listing for its food and refreshments business, which includes Ben & Jerry’s. He said Peltz’s presence would ‘prompt Unilever’ to better spell out its strategy and longterm vision. Delmas added that Trian could spell out a plan as early as July 26, just six days after Peltz’s appointment is expected to be approved.

Jefferies analyst Martin Deboo said in January: ‘Trian has a long and successful track record of unlocking value. This has frequently centred on splits and spin-outs.’

Morgan Stanley analysts cast doubt on there being a ‘quick turnaround’ at Unilever, but said Peltz’s appointment would boost shares.

They said Trian’s involvement comes at a ‘particularly challenging’ time for Unilever and investors would be focused on three areas. They included increasing its focus on better performing brands, better targeting its investment spending and ‘careful portfolio management’.

And AJ Bell investment director Russ Mould said Peltz would pile further pressure on beleaguered Jope.