U.S. activist shareholder Third Point has targeted Nestle by taking a $3.5 billion stake in the food maker and urging Europe's most valuable company to boost returns as demand for its products weakens. Sonia Legg reports
He's a pushy billionaire with a taste for breaking up big firms. Now Dan Loeb has Nestle in his sights. The activist investor has taken around 40 million shares in the Swiss food maker - that's a $3.5 billion stake. He wants Europe's largest company to improve margins, buy back shares and get rid of non-core businesses. (SOUNDBITE) (English) WORLD FIRST, CHIEF ECONOMIST, JEREMY COOK, SAYING: "I think that the future of food as far as the future of consumer goods in the developed world is changing in a very, very interesting dynamic. We just have to look at last week or a couple of weeks ago, at the Amazon purchase of Whole Foods. Now that is a retailer buying a retailer, but there has to be a supplier arrangement." The stake is the largest ever taken by Loeb's Third Point Hedge Fund. In the past he's pressed for change at U.S. internet firm Yahoo and Japan's Sony Corp following significant investments. (SOUNDBITE) (English) WORLD FIRST, CHIEF ECONOMIST, JEREMY COOK, SAYING: "I don't think you can come in that quickly into a business that size and demand changes, as you would do for example a smaller supplier. But it does certainly mean that the performance is number one and crucial. You know if you're on the board of Nestlé you'd have to be saying that this sharpens the pencils a little bit." The news sent Nestle shares up almost five percent touching record highs. But the world's biggest supplier of packaged food has plenty of challenges. It's been struggling with a slowdown in emerging markets and falling prices in developed ones. Consumers are also demanding fresher, healthier products. Only this month Nestle said it might sell its $900 million-a-year U.S. confectionery business. And there's speculation its U.S. frozen food business could be next.