{"id":10593,"date":"2025-09-29T21:24:24","date_gmt":"2025-09-30T01:24:24","guid":{"rendered":"https:\/\/ecademydj.com\/?p=10593"},"modified":"2025-10-02T17:22:34","modified_gmt":"2025-10-02T21:22:34","slug":"would-nestle-be-once-again-in-the-radar-of-activist-investors","status":"publish","type":"post","link":"https:\/\/ecademydj.com\/en\/2025\/09\/29\/would-nestle-be-once-again-in-the-radar-of-activist-investors\/","title":{"rendered":"Would Nestl\u00e9 be Once Again in the Radar of Activist Investors?"},"content":{"rendered":"

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Nestl\u00e9, the world\u2019s largest food and beverage company, may be facing renewed activist scrutiny as cracks emerge in both its financial performance and corporate governance structure. These cracks have been amplified by two sudden CEO changes within just one year and the unexpected early departure of its Chairman<\/strong>, underscoring instability at the top of the organization. Together with weaker financial performances and governance concerns, this raises the question: could Nestl\u00e9 be targetable by activist investors again?<\/p>\n

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Weak Total Shareholders Returns<\/strong><\/p>\n

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Over the past years, Nestl\u00e9\u2019s Total Shareholders Returns<\/strong> have significantly underperformed compared to peers such as Danone, Unilever, or PepsiCo. While rivals have delivered double-digit growth, Nestl\u00e9 reported \u201314.4% over one year, \u201327.6% over three years, and \u201321.7% over five years <\/strong>(Table 1).<\/p>\n

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Table 1<\/p>\n

\"Table<\/a><\/p>\n

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Despite this underperformance, Nestl\u00e9\u2019s Return on Assets <\/strong>(Table 1) remains strong, averaging close to 10% and broadly in line with or above peers\u2014suggesting the core business is operationally sound. However, valuation metrics such as Price-to-Book<\/strong>, 6.62 down from a five-year average of 6.68, highlight a stagnating or declining market perception (Table 1).<\/p>\n

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Questionable Capital Allocation<\/strong><\/p>\n

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Since 2017, Nestl\u00e9 has spent ~CHF 53 billion on buybacks. The outcome is clear: no durable value creation<\/strong> especially in terms of Total Shareholders Returns, and a doubled debt load<\/strong> (from ~CHF 30 billion to ~CHF 60 billion). This looks less like disciplined capital return and more like an admission of strategic drift<\/strong>. Cash was burned to mask weak performances rather than to build the next decade of Nestl\u00e9.<\/strong><\/p>\n

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The Board chose to shrink equity instead of funding category innovation, scaling winning platforms, making transformative portfolio moves, or stepping up capex where returns justify it. In short, the buybacks signal a shortage of bold ideas from the Board about how to shape Nestl\u00e9\u2019s future.<\/strong><\/p>\n

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Meanwhile, the sizeable L\u2019Or\u00e9al stake remains largely passive capital that could be monetized to restore strategic flexibility.<\/p>\n

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Governance Red Flags<\/strong><\/p>\n

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Governance concerns may prove the more compelling angle for activist attention. Currently, only 4 of 14 board members<\/strong> bring FMCG experience, with recent additions\u2014Luca Maestri (Apple) and Geraldine Matchett (DSM\/Firmenich)\u2014lacking direct exposure to Nestl\u00e9\u2019s core B2C categories. At the end, aside from Chairman Paul Bulcke who just left, no directors have long-standing ties to the company\u2019s categories.<\/p>\n

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Other issues include:<\/p>\n