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Friday, May 20, 2022

Why Unilever, Peloton and Kohl’s are causing the wrath of powerful investors.

When a company’s stock starts to drop, activist investors often rush in to shake things up, putting pressure on underperformers to cut costs, shed underperforming assets, or even consider selling altogether.

Sensing an investment opportunity at a time when the stock market was shaky, activists set their sights on their latest targets: multinational consumer goods company Unilever, fitness equipment maker Peloton and department store chain Kohl’s.

Just days ago, Unilever suffered a major setback when it was forced to abandon its $68 billion bid for GlaxoSmithKline’s consumer health division.

He now has to deal with one of Wall Street’s most notorious activist investors, Nelson Peltz, who has amassed a stake in the consumer goods giant through his investment firm Trian Fund Management, two people briefed on the matter said Sunday. Mr. Peltz has experience working with large consumer companies, having won a seat on the Procter & Gamble board of directors in 2017.

It’s unclear how much Trian owns or what it’s calling for, although one person said the firm began buying Unilever shares before the company’s pursuit of the GlaxoSmithKline business was known. Unilever shares rose nearly 7 percent in London. READ MORE

In a letter to home fitness equipment maker Blackwells Capital urged directors to fire the company’s chief executive, John Foley, who is also a co-founder, and weigh in on the sale as its stock tumbles amid falling sales and gains. inventory. The company’s shares fell nearly 4 percent in premarket trading.

The company is in worse shape now than it was before the pandemic propelled it to growth, Blackwells said, due to “high fixed costs, excessive inventory, a sluggish strategy, depressed employees and thousands of disgruntled shareholders.” However, any fight can be an uphill battle: Peloton has two shares where Class B shareholders have significantly more voting rights, and Mr. Foley alone controls almost 40 percent of shareholder votes. A Peloton spokesperson did not immediately respond to a request for comment.

According to two people familiar with the matter, Kohl’s department store received an offer to go into private ownership worth about $9 billion in a deal with an investment consortium backed by activist hedge fund Starboard Value. Private equity firm Sycamore Partners also contacted Kohl about a possible deal.

On Monday, Kohl’s confirmed that it had “received letters expressing interest in acquiring” the company. Its shares are up more than 30 percent from premarket trading.

Kohl’s is already under pressure to increase its share price. Activist firm Macellum Advisors, which owns a 5% stake in Kohl’s, urged the retailer in a letter last Tuesday to explore strategic alternatives, including a sale. It comes after the company drew similar criticism over Kohl’s stock last year. Hedge fund Engine Capital also urged Kohl’s to consider selling along with other strategic initiatives. READ MORE

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