Peltz says Danone shares are undervalued

AP News
Posted: Nov 08, 2012 6:31 PM

NEW YORK (AP) — Danone S.A. is in the sights of activist investor Nelson Peltz.

The CEO of Trian Fund Management LP said at a conference in Chicago Thursday that he believes the French food company is one of the best positioned global packaged food companies, with a solid presence in emerging markets and high-growth categories. But its shares, he said, are trading below their true value.

He suggested the company could benefit from a leaner cost structure and staying away from dilutive mergers to improve shareholder value.

Peltz also said that the company's lineup of products should allow it to deliver above-average margins, but it lags behinds its peers. He said Danone should adopt a more balanced approach to growing not only sales but profitability.

Funds managed by Trian have about a 1 percent interest in Danone.

Danone is one of the world's largest food makers with products such as Evian water, Activia yogurt and Milupa baby food.

Peltz and Trian are known for shaking up other companies. And Peltz is not new to the food industry. He sits on the board of H.J. Heinz Co. and was an active investor in Kraft Foods before it split its grocery business from its global snacks business.

Danone has struggled with softer sales in Europe due to the tough economy there, but it has a growing presence in emerging markets.