P&G hits back at activist investor Trian's business plan

Helen Cahill
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Trian is P&G's fifth-largest investor (Source: Getty)

Consumer goods giant Procter & Gamble (P&G) today shot down suggestions made by activist investor Nelson Peltz, saying his plans would ramp up costs and cut into the company’s profits.

On Wednesday, Peltz’s Trian Partners released a proposal for the company, saying that it should be arranged in three separate business units, and set up under a “lean” umbrella holding company.

He has previously criticised the “suffocating bureaucracy” of the firm and complained about its stock price.

Trian Partners is P&G’s fifth-largest shareholder.

Read more: Cadbury’s raider loses first ever boardroom vote

But P&G has said Peltz’s paper is “nothing substantive”, and that his recommendations would only create more complexities in the firm’s management.

P&G said in a statement: “The reality is that before Mr. Peltz made his investment, P&G was already successfully executing the most significant transformation in the company’s history.

“As a result, P&G is a profoundly different company today than it was just a few years ago...P&G is well positioned to maximize long-term shareholder value through balanced top-line growth, bottom-line growth and cash efficiency.”

The firm said it was delivering on its profit and cash flow objectives, that it was well-positioned to meet its savings targets, and had increased its dividend for 61 years in a row.

“Trian’s white paper completely ignores the fact that P&G’s productivity program is substantive and impactful,” P&G said in its statement.

Read more: Trian takes $3.5bn stake in P&G

“This program has allowed the company to improve margins and financial performance while absorbing historic currency headwinds, underlying cost inflation, the impact of asset sales, and the cost of transforming the company.”

The company also criticised Petlz for not sharing a white paper in the sixth months since first becoming an investor.

Peltz is seeking to establish himself on the board of P&G.

The company has turned down his request, but investors will vote on whether he should be added on 10 October.

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