Billionaire Loeb Primes For Nestlé Showdown By Calling On Industry Veteran
In his showdown with Nestle SA, hedge-fund billionaire Dan Loeb has tapped an industry veteran with more experience at other listed consumer-product companies than the Swiss giant’s entire board.
Jan Bennink, who has managed dozens of well-known brands at Procter & Gamble Co. and other industry giants, is advising Loeb’s Third Point on its $3.5 billion stake and has put a chunk of his own money into the investment.
The 60-year-old Dutchman will apply the brand-building and deal-making skills he’s honed over a 35-year career to help foment change at the maker of Nespresso coffee and Gerber baby food at a time when consumer companies are grappling with sluggish demand. In disclosing his stake and Bennink’s appointment last month, Loeb said Nestle has fallen behind its peers and needs to lay out a “decisive and bold action plan” to boost margins, jettison laggard brands and amp up its sleepy corporate culture.
If Nestle does not propose a plan to boost profit margins, “you might find that Third Point pushes for Bennink to go onto the board,” said Jon Cox, an analyst at Kepler Cheuvreux. “He has been running a number of companies that were ultimately taken over and knows how to create value for shareholders.”
While many directors at Procter & Gamble, PepsiCo Inc. and Unilever are former executives of other consumer-goods companies and retailers, Nestle has only limited representation from such outsiders. Chairman Paul Bulcke has 38 years’ experience in the industry, all with Nestle. The only other member with a significant background in the consumer business is Eva Cheng, who was head of greater China and Southeast Asia for closely held Amway before retiring.
The board does include luminaries such as former Swiss National Bank Chairman Jean-Pierre Roth and former Axa SA Chief Executive Officer Henri de Castries, and Cox said the management team includes “many, many years” of experience. Nestle declined to comment.
It’s not clear whether Bennink would pursue a more radical agenda than new Nestle CEO Mark Schneider, who in his first six months has signaled a more aggressive transformation than his predecessor, Bulcke. Schneider has launched a share buyback and put Nestle’s U.S. confectionery business under review for a possible sale while indicating that further changes are in store.
In previous roles, Bennink often battled Nestle while soaking up lessons from industry titans such as A.G. Lafley, former Procter & Gamble CEO.
“Nestle, I’ve been competing with them all my life,” Bennink said in a June 2011 interview at the Downers Grove, Illinois, headquarters of Sara Lee Corp., where he got to know Loeb while serving as executive chairman and overseeing its split into two companies. He and Third Point declined to comment for this article.
Bennink’s life began in the food aisles as the son of a grocer in the Dutch city of Groningen. After studying at Groningen University, a cradle of Dutch executives, he joined P&G. There, he managed the Dawn dishwashing brand and worked with future CEOs Lafley and Bob McDonald.
A stint at German household-goods maker Benckiser followed, where Bennink reported to Peter Harf, who is now part of the management troika at JAB Holding Co. that has invested the fortune of Austria’s billionaire Reimann family in food companies like Keurig Green Mountain and Panera Bread. In 1995, he joined French dairy maker Danone, where he saw huge potential for a tiny brand of drinkable yogurt called Actimel whose sales he helped expand to $1 billion.
Wanting a CEO job, Bennink left Danone for Dutch baby-food maker Royal Numico NV, where he fired the management team and jettisoned the GNC vitamin-store business. He then convinced the board to pay a steep price for EAC Nutrition, which had a strong position in China’s burgeoning pediatric nutrition market.
“Looking back, this was a turning point in Numico’s growth story,” said Ajai Puri, a longtime Coca-Cola executive whom Bennink hired to run research and development at Numico, and has served on the board of Swiss chocolate maker Barry Callebaut AG. The deal fattened Numico’s profit margins and made it an attractive takeover target, and Bennink garnered a hefty multiple of about 22 times earnings when he sold Numico to Danone for $16.8 billion in 2007.
“Jan has a good feel for where consumers are going,” Marcel Smits, Sara Lee’s former CEO, said.
Loeb has urged the Swiss company to sell its $27 billion stake in French cosmetics giant L’Oreal, saying this would allow Nestle to make acquisitions of its own in high-growth categories. Some analysts think the company should also sell its frozen-food business.
“Nestle has arguably been lackadaisical and complacent,” Andrew Wood, an analyst at Sanford C. Bernstein, wrote in a note. “It might now be stirred into action by an external force.”