Investor calls Unilever plans ‘near death experience’

These are painful days for Unilever. “Please don’t do it,” said an analyst early this week, when it was leaked that Unilever was after the consumer arm of the British GSK. It rained unprecedented criticism on the acquisition plans on Monday, and Unilever’s share price plunged about 7 percent.

It is now clear: Unilever is not going to do it either. On Wednesday, the food manufacturer announced that it would not increase its bid of 50 billion pounds (60 billion euros) for the maker of Aquafresh toothpaste and Otrivin nasal spray. GSK had already let it be known that an amount was far too low to be found.

But that does not mean that the criticism of Unilever (Dove, Knorr, Omo) has died down. On Thursday, the company’s top management was again thoroughly overhauled by the large British investor Fundsmith, in a letter to its shareholders. Business newspaper Financial Times saw that letter.

Fundsmith founder Terry Smith, along with his head of research Julian Robins, call the hunt for GSK “a near-death experience,” FT quotes — a reference to Unilever’s 2017 hostile takeover offer from KraftHeinz, which former CEO Paul Polman once made. was also described as such.

Read also‘I’m at the forefront, I make people uncomfortable’

Smith also strongly opposes the Monday sent out Unilever strategy update, which states that the company wants to grow faster through “major acquisitions” in the field of ‘health, beauty and hygiene’. Smith sees nothing in that. Not only is Unilever’s board reacting to poor performance with all kinds of “meaningless platitudes”, but now it also wants to make very large acquisitions, he writes. Sarcastic: „What could possibly go wrong?”

A major investor criticizes Unilever’s ‘meaningless platitudes’

As Unilever, make sure you get your business in order, Smith believes, before you ‘take on any more challenges’. Also the ‘I’m at the forefront, I make people uncomfortable’intent to sell underperforming brands has been criticized. Management runs the company as if they were playing cards, quotes FT: “They discard their worst cards every round, hoping to get better ones.” But perhaps they should ask themselves whether the problem is not with the ‘cards’ but with the ‘players/management’, Smith said.

Last week Fundsmith . founded even though his arrows are on Unilever. The company would be too busy finding a purpose — a mission or higher purpose — for every brand, Smith wrote. But consumers do understand what the purpose mayonnaise, for example, he says: “Spoiler alert—salads and sandwiches.” Underlying criticism is that the emphasis on sustainability and purpose at Unilever “comes at the expense of focus on the fundamentals of the business”.

Unilever was one of the five worst performing companies in Fundsmith’s portfolio last year. The share price is currently lower than when CEO Alan Jope took office in January 2019.

Last weekend it leaked that Unilever was interested in the consumer branch of GSK. On Monday, the offer was still defended by the top of the company. It would be a good “strategic match”. Critics pointed to the high takeover amount, which would have forced Unilever into serious debt. In addition, about half of GSK’s brands consist of medication that can be bought at the drugstore, such as Advil and Voltaren: products with which Unilever has no experience.

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