Unilever’s largest shareholder has spoken out to warn his boss about the dangers of Marmite ownership.
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. Unilever’s shares plummeted after news broke that GSK had attempted to purchase the consumer division of GSK three times, including Sensodyne as well as Panadol.
Swoop: According to city sources, private equity firms, including KKR, have begun to circle Unilever in an effort to purchase 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.
According to sources in the city, The Mail was informed Sunday by people familiar with the matter that Unilever is being scouted by private equity firms including KKR to try and get parts.
Flossbach – Unilever’s 12th largest shareholder – likened the disastrous bid to Reckitt Benckiser’s much-criticised takeover of Mead Johnson in 2017. Sunday, Flossbach said to The Mail that Unilever must remain focused on their core competencies. [over the counter] pharmaceuticals.
“Reckitt Benckiser acquired Mead Johnson Nutrition, a sign of the dangers of leaving your network of competence.” 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).
Rakesh Kapoor was the chief executive and he ended up retiring.
Terry Smith, a veteran fund executive, also challenged the group to be focused on its performance rather than embarking upon large-scale acquisitions. Smith did not urge Jope to be fired, but described the deal as “near death” experience.
The Mail received information from several investors that stated they spoke privately to Unilever about their concerns over the attempted takeover.
Analysts disagree with Jope’s decision. They point to Centerview Partners and Deutsche’s senior bankers who advised on the transaction.
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.
As part of their strategy, he said that they saw an opportunity for GSK to purchase its consumer businesses. Unilever did not respond to our request for comment.