Feb 15 Procter & Gamble Co's shares hit a
two-year high at open on Wednesday after activist investor
Nelson Peltz-led hedge fund disclosed a big stake in the
consumer goods giant, raising hopes of more cost cuts or a
possible breakup of the company.
Trian Fund Management LP disclosed on Tuesday a $3.5 billion
stake in P&G, the fund's largest ever position in a company.
P&G has been selling off unprofitable brands - including 41
beauty brands to Coty Inc - and focusing on core brands
such as Tide, Pampers and Gillette to revive sluggish sales.
However, the efforts have failed to boost its stock its
stock much beyond where it traded two years ago.
"While P&G has taken sensible steps to enhance shareholder
value recently, the perceived value of a P&G break up is likely
to re-emerge, and Mr. Peltz's presence may lead to
greater/faster realization of cost-savings and/or raise the
execution bar at P&G," Jefferies analyst Kevin Grundy wrote in a
Breaking up P&G might be the best option as larger breakups
typically result in greater stock returns versus smaller
divestitures, Bernstein Research analyst Ali Dibadj wrote in a
Cost and revenue benefits from "scale" have been elusive for
P&G, he said.
However, some analysts were not convinced about the need for
radical changes at P&G.
"We see Trian's P&G stake as late in the company's
turnaround process," RBC Capital markets analyst Nik Modi wrote.
"We believe new CEO David Taylor is appropriately managing
the business and addressing the three major buckets that Trian
could address: portfolio alignment, cost and top line."
P&G's shares were up 3.7 percent at $91.10. The stock was
the biggest boost to the Dow Jones Index.
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by