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Nestle plans $20.8b share buyback
June 29, 2017
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LONDON: Nestle plans to buy back as much as 20 billion Swiss francs ($20.8 billion) worth of shares over three years, it said on Tuesday, days after US activist shareholder Third Point LLC began a campaign to boost performance at the company.

The New York-based hedge fund, controlled by billionaire investor Daniel Loeb, disclosed a $3.5 billion stake in the company late on Sunday when it started pushing for Nestle to more aggressively boost performance and buy back shares.

Nestle, maker of Gerber baby food and Perrier water, said its announcement was the result of a review of its priorities that had begun in early 2017. It did not mention Third Point in its statement, and Third Point declined to comment on the announcement.

Such buyback plans take time to get approved, making it clear that Nestle had finalized the plan before Third Point made its position public.

It could not be known, however, whether feedback that Loeb might have given Nestle in a meeting earlier this month was taken into consideration when crafting the final buyback plan, which will start on July 4.

Still, the timing of the announcement suggests that pressure brought to bear by the activist investor, who has taken on giants including Yahoo and Sony Corp, may have played a role.

“The timing of Nestle’s announcement gives the impression that management has been cowed or bullied by an activist investor owning 1.3 per cent of the company,” said Bernstein analysts, in a reference to Loeb.

Nestle said that share buybacks offer a “viable option to create shareholder value” in the context of low interest rates and strong cash flow generation.


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