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July 2, 2018

Third Point’s Loeb launches blistering attack on Nestle 

Activist investor Daniel Loeb has renewed his attack on food giant Nestle, calling on the company's board to be "sharper," "bolder" and "faster" and for the business to be divided into three divisions.

Activist investor Daniel Loeb has renewed his attack on food giant Nestlé, calling on the company’s board to be “sharper,” “bolder” and “faster” and for the business to be divided into three divisions.

The manager of the US$18bn hedge fund Third Point, which has invested more than $3bn into Nestlé, has written a letter, seen by news agency Reuters and the UK’s Financial Times amongst others, which demanded the company spin off more businesses that do not fit its strategy including ice cream, frozen foods, and confectionery; divide itself internally into three divisions – beverages, nutrition and grocery; and add an outsider to the board with expertise in the food and beverage business.   “This is a call for urgency – rather than incrementalism,” said Loeb’s letter which came with a 34-page presentation with recommendations and critiques. 

Third Point suggests each of three divisions should have its own CEO, regional structure and marketing heads.

“This would “simplify [Nestlé’s] overly complex organisational structure,” the letter said.

Loeb’s reported demands come roughly on the first anniversary of his investment in Nestle and his first public criticism of the business.

Towards the end of June last year, Nestlé, days after Loeb’s first attack on the company’s strategy, outlined where it planned to focus its resources on trying to drive growth.

At the time, the KitKat and Maggi owner said its management and board had earlier in the year reviewed where its “priorities”, as well as the company’s capital structure, to improve the group’s ability to “deliver on its value creation model”.

In January this year, Nestle sold its US confectionery business to Ferrero. Days later, Loeb called for the disposal of other “ill-fitting businesses”.

“Nestlé’s insular, complacent, and bureaucratic organisation is overly complex, lethargic, and misses too many trends,” Loeb said in the new letter.

just-food has asked Nestle for a response to Loeb’s latest comments.

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