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Activist investor Loeb blasts 'muddled' Nestlé

ZURICH -- U.S. activist investor Daniel Loeb on Sunday ratcheted up power on Nestlé SA control to boost its financial returns and promote its stake in L'Oréal, criticizing Nestlé for what Mr. Loeb sees as a lackluster effort to revamp the packaged-food massive's technique.

Mr. Loeb's criticisms, contained in a letter to Nestlé's top control and a 34-page report, recommend that a raft of changes initiated by means of Nestlé up to now year -- including a big proportion buyback, a advertising maintain Starbucks Corp. and investments in abruptly rising corporations like Blue Bottle Coffee -- have failed to fulfill the investor.

Mr. Loeb's Third Point LLC owns more than $3 billion in Nestlé inventory, or about 1.25% of its shares.

"Nestlé's management is not moving quickly enough to exit underperforming and non--strategic businesses," Mr. Loeb mentioned in a letter to Nestlé leader executive Mark Schneider and the board of directors. He blasted a "muddled strategic approach" that does not be mindful changing user conduct.

Mr. Loeb mentioned Nestlé will have to divest as much as 15% of its sales and use the proceeds on acquisitions or purchasing again more shares. The time is correct for adopting this technique, he mentioned, mentioning "this time of elevated multiples and strong strategic demand for some of its lower growth businesses."

The corporate, he mentioned, has also been "unable to articulate a compelling strategic rationale for continued ownership" of its 23% stake in L'Oréal.

Mr. Loeb disclosed his Nestlé stake more or less three hundred and sixty five days ago and pressed for major changes to fortify its financial performance including proportion buybacks, promoting noncore assets including L'Oréal and adopting a formal margin goal.

Nestlé, in flip, followed many of his proposals. Last June, it launched a more or less $20 billion proportion buyback. It offered its U.S. confectionery business in January and final year got Sweet Earth Foods, a maker of plant-based protein foods.

In May, it purchased the rights to offer Starbucks coffee and tea in grocery and retail shops for more than $7 billion.

Nestlé has struggled with slow sales lately, as have other huge consumer-goods corporations that every one face changing user tastes and difficulty elevating costs.

"Although the Company has taken some steps consistent with our suggestions, the modest pace and magnitude of these changes suggest that Nestlé feels satisfied with its position," Mr. Loeb mentioned in his letter Sunday.

A Nestlé spokesman didn't right away respond to a request for remark.

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