One of Unilever’s most powerful shareholders breaks ranks to deliver stark warning to Marmite owner’s boss that his job is hanging by a thread
One of Unilever’s most powerful shareholders has broken ranks to deliver a stark warning to the Marmite owner’s boss that his job is hanging by a thread.
Bert Flossbach – owner of investment group Flossbach von Storch which holds Unilever stock worth £1.25billion – urged chief executive Alan Jope to stick to improving performance rather than chasing costly deals.
Jope was criticised after revelations he repeatedly tried to buy a £50billion arm of rival GlaxoSmithKline. Shares in Unilever plunged after it emerged last weekend the FTSE100 company tried three times to acquire GSK’s consumer division, including Sensodyne and Panadol.
Swoop: City sources said that private equity firms, said to include KKR, are now circling Unilever with a view to picking off parts
The audacious bid by Unilever, which makes products including Ben & Jerry’s ice cream and Hellmann’s mayonnaise, sparked a fierce backlash from investors.
City sources told The Mail on Sunday that private equity firms, said to include KKR, are now circling Unilever with a view to picking off parts.
Flossbach – Unilever’s 12th largest shareholder – likened the disastrous bid to Reckitt Benckiser’s much-criticised takeover of Mead Johnson in 2017. Flossbach told The Mail on Sunday: ‘Unilever should stay focused on their core competence, which is not [over the counter] pharmaceuticals.
‘Reckitt Benckiser’s acquisition of Mead Johnson Nutrition showed the risks of leaving your circle of competence. In the end, it cost the CEO his job.’
Reckitt Benckiser, which sells Dettol and Durex, saw £10billion written off the baby formula company Mead Johnson which it had bought for $17billion (£12.5billion).
Chief executive Rakesh Kapoor ended up retiring.
Fund veteran Terry Smith also called on the group to focus on its own performance before embarking on a large acquisition. Smith, who stopped short of calling for Jope’s head, described the proposed deal as a ‘near death experience’.
Several major investors told The Mail on Sunday they met privately with Unilever last week and expressed concerns about the takeover attempt.
But some analysts said Jope should not be singled out, pointing to the board and senior bankers at Deutsche and Centerview Partners who were advising on the deal.
During the investor meetings, it is understood Jope explained which divisions have been earmarked for growth through acquisitions – including beauty, pet care and consumer health care.
He said they saw an opportunity to buy GSK’s consumer businesses as part of that strategy. Unilever declined to comment.