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Peltz likely not done at P&G, analysts say


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Peltz likely not done at P&G, analysts say

Nelson Peltz may have failed to get a seat on Procter & Gamble Co.'s board, but that does not mean he is done with P&G.

Preliminary results from the consumer goods giant show that shareholders elected all 11 of the company's nominees for its board of directors at the consumer product giant's annual meeting on Oct. 10 in Cincinnati. If certified by independent auditors, the result leaves Peltz and Trian Fund Management LP, the hedge fund he leads as CEO and a founding partner, without a position on the P&G's board.

Analysts said he may not be through at P&G, though. If Trian maintains its investment in the company, they pointed out, it will still be a major P&G shareholder. As of June 30, Peltz's Trian owned 37,612,012 shares of the company, or about 1.48% of all outstanding shares, according to S&P Capital IQ.

Broadly, Peltz's campaign created a sense of urgency among P&G's management, who said during the proxy fight that they were in the midst of their own companywide turnaround, Barclays analyst Lauren Lieberman wrote in an Oct. 11 research note.

As executives try to make good on that plan, they may end up consulting Peltz, Edward Jones analyst Jack Russo said in an interview.

"He's probably not going to go away," Russo said. "I think P&G would be foolish not to have discussions with him."

While Peltz will not have a seat on P&G's board, Russo said, some of his proposals appeared to resonate with P&G's leadership. By suggesting that the company acquire more small brands, for instance, Peltz identified a challenge that many consumer goods companies face connecting with younger consumers, Russo said.

Continued conversation with P&G's executives would be in line with Peltz's precedent. In October 2015, Peltz reportedly met with executives at E. I. du Pont de Nemours and Co.., roughly five months after Trian lost a battle with the chemical company and after CEO Ellen Kullman left the company as its financial results came in below analyst expectations, according to a Fox Business News report. DuPont and The Dow Chemical Co. announced Sept. 1 that they had completed their planned merger and formed DowDuPont Inc.

If P&G's incumbent leadership runs into problems improving the company's market share and financial positions, "there will be little patience from Peltz and importantly other investors if the turnaround doesn't progress as expected," Wells Fargo analyst Bonnie Herzog wrote in a research note Oct. 10. Herzog added that Peltz will likely "continue to be an active shareholder and press [P&G] for change," similar to what he did at DuPont.