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Unilever bid fiasco raises the pressure of managers to submit plans B

As Christmas approaches, Unilever CEO, Alan Jope, hopes to give investors a chance to enjoy: the company’s biggest purchase.

He offered to open the GlaxoSmithKline and Pfizer team in early November, hoping to launch the business before it was released to the local market. This did not get them to the negotiating table and, on December 20, Jope did what he was sure to do: a third, mostly £ 50bn.

But this came to a head when the medical staff rejected the offer before the new year. GSK and Pfizer had different interests – and Pfizer’s action on the economy – but they both agreed. £ 50bn was very low.

This week, after the news broke, the investors responded last punch to any opportunity for cooperation.

In a dialogue with supervisors they expressed confusion, skepticism and direct criticism, according to those who own several shares. Unilever’s share price fell by 11% before the company, which experts said was not yet ready for a major lease, said it would do so. not a new offer.

The conviction and bid has put the FTSE 100 customer base in a state of disarray since Kraft Heinz acted five years ago, questioning Jope’s management and sparking controversy over how Unilever, which employs about 150,000 people, could increase its laziness. work.

“Unilever has to deal with the fact that five years later the share price is at the same level [Kraft Heinz] please, ”he said Terry Smith, who owns the top 15 shares, in the letter for depositors Thursday. “Why should we rely on managers and this team to save profits for shareholders?”

Complaints from shareholders

Dissatisfaction was already growing at the age of 90-year-old ice cream maker Domestos bleach and Pot Noodle, whose marketing activities lagged behind their rivals despite Jope’s promise to focus on growing areas.

GSK’s acquisition was designed to accelerate market growth using Unilever’s advertising and distribution technology for healthcare brands including Advil painkillers, Centrum vitamins and non-prescription drugs such as Theraflu. But instead it caused a cry.

Advertisers were alarmed by the amount of potential, which would raise Unilever’s debt to 4.5 or five times. But not everyone agrees with it, says Bruno Monteyne, a Bernstein researcher.

Bert Flossbach, co-founder and chief financial officer at Flossbach von Storch, Cologne’s € 80bn property manager who is one of 10 Unilever shareholders, said: “Jope is in trouble because Unilever has been paralyzed for so long But if you do not have enough money to buy anything, do not buy anything. ”

Jope tried to revive Unilever’s strategy last year increase its number in jewelry and accessories and to draw small customers – but this was received without market attention.

GSK’s request has also undermined the confidence of its chief executive officer and chief financial officer, Graeme Pitkethly, to offer a change. “They have shown their hand: they obviously have no confidence in the existing business, otherwise they would not have considered this,” said Investor, who asked not to be named.

After taking office in early 2019, the former Unilever Jope retained, then lowered the 20 percent target by 2020 set by his predecessor, Paul Polman, at the request of Kraft Heinz.

But long-term pressure to increase profits, according to investors and other experts, has led to a shortage of Unilever products, which range from Knorr stock cubes to Dove soap and to a strong presence in emerging markets such as India.

One Unilever fan also said that some of his problems are related to the working groups. “Even Superman could not drive growth in Knorr either Hellmann History to further the growth of L’Oréal or Estée Lauder.

Unilever’s potential for GlaxoSmithKline and Pfizer would increase its debt to 4.5 or 5 times its earnings © Leon Neal / Getty Images

Prepare for growth

Many researchers agree that Unilever needs to urgently change its history to more growing areas such as plant-based foods and vitamins, depending on rival Nestlé, but they differ in the size of what they can get and lose.

One of the 15 shareholders said: “I do not think he did not run the business well but I wonder if he is very close to Unilever being the biggest giant he is today.

“If they. . . reducing that amount by selling some of the previously growing businesses, which would make its price better. “

Martin Deboo, a researcher at Jefferies, wants Unilever to reduce its share of food and refreshments, which have dwindled in comparison to its larger domestic and social care business. The company approved a € 4.5bn contract selling his tea last year.

“The market thinks the Unilever growth problem is due to a lack of funding. We think this is due to the food crisis industry, where we want to see time-wasting trends,” he said.

Smith and others also criticized Unilever’s interest in his established credentials; Smith last week mocked the company for speaking “Guided by purpose” Hellmann’s mayonnaise.

A group of buyers wanted to sell their food parcels to help get GSK, which means Smith mayonnaise comments “would not have come at a bad time with Alan’s help or at any extraordinary time, depending on what Alan was doing in the past.”, Said a Unilever fan.

Smith acknowledged that contact with shareholders has been successful since Polman’s day. He also said he was interviewed about GSK’s business, even trying to get the expected reimbursement from the GSK agreement “was like a dentist pulling out a back tooth”.

Dissatisfaction with Magnum ice cream maker was tied even before GSK imported the fiasco as its commercials were left behind by its competitors © Altan Gocher / GocherImagery / Shutterstock

But an anonymous broker criticized the company for being “arrogant” in communicating with its owners, for example for failing to show that they were considering big purchases. “There were cultural issues under the former CEO and I don’t think anything has changed under Jope,” the salesman said.

They warned that their operations at Unilever were “on the wrong track” and could be sold in a few years’ time, after a sharp rise in announcements the company had planned to follow with the annual results on February 10.

The prospect of M&A disappears

Unilever revealed this week that it will be open to other major healthcare companies, which could include the Johnson & Johnson consumer business – set up in the next 18 months – or Sanofi, which is also planning to part with its parent. company.

Researchers also speculated about the possible collaboration between Unilever and Reckitt Benckiser, a manufacturer of Durex condoms and Strepsils cold compresses.

But experts and accounting firms have reduced their chances of acquiring or consolidating the GSK stock rate following negative results from some recent major consumer transactions. Reckitt’s acquisition of $ 13bn for children’s formula maker Mead Johnson in 2017 led to a £ 8bn signing. Unilever’s recent acquisition, the $ 1bn purchase of the Dollar Shave Club in 2016, “stays in an unknown grave”, according to Smith.

GSK is moving forward with plans to roll out the consumer segment, including corner investors so that they and Pfizer can better sell their reserves.

Another well-known potential advertiser, Procter & Gamble, has refrained from announcing this week that he has no plans for a major M&A. Private buyers may find it difficult to meet Unilever’s demands, as they will not benefit from any contract.

For Jope and the Unilever board, one way is to convince shareholders that managers need to be given time to change the business. “The big question now is whether major damage has occurred because of the reliability of the board and controllers,” Monteyne said.

“The story is Alan [Jope] he is a good man at heart and could rarely do any harm to anyone. That is why investors ask him difficult questions and try to help. . . But you have to be shy and tell people what they don’t want to hear, ”said a Unilever fan.

Jope has promised to unveil “a major way to improve our work” this month, created by the new agency. Unilever said it wants to promote health, beauty and hygiene.

Some investors are optimistic. Hugh Yarrow, Evenlode Investment’s history manager, said in a letter to investors that it was a “wise decision” not to follow the GSK agreement.

“These developments, as well as the ongoing discussions with shareholders, could be a catalyst for Unilever’s progress,” wrote Yarrow.

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