P&G May Have Peltz On Board Per A Recount, Acquires Native

The battle for a seat on the board of The Procter & Gamble Company (NYSE:PG) or P&G may now be drawing to a close. Hedge fund billionaire Nelson Peltz seems to have won a seat, albeit narrowly, after a recounted tally of votes was released on Nov 15.

Shares of the world’s largest consumer products maker by market value gained more than 3% in after-hours trading on Nov 15. The news might have cheered P&G investors, who support management reshuffle in the hope of financial improvement.

P&G revealed Peltz is leading Ernesto Zedillo by 0.0016%, or 42,780 shares, out of the company's nearly 2.7 billion in diluted shares outstanding. In a preliminary count disclosed last month, Peltz fell short of winning by 6.2 million votes, after losing by 0.3% of votes cast.

However, yesterday’s updated vote count is also a preliminary one, and subject to review and a challenge period. The company, currently under CEO Taylor, is simplifying its operating structure to boost sales and profits.

In contrast, Peltz’s Trian Fund Management wants to radically alter the company’s corporate structure. Trian argued that P&G should be simplified further into three standalone business units, namely grooming ($26 billion in annual sales), home care ($21 billion) and family care ($18 billion).

Native Buyout

In a separate business development, P&G announced the acquisition of Native, a startup competitor that specializes in direct-to-consumer personal care products. Although the financial terms of the deal were not disclosed, it marks P&G's first buyout in eight years.

Bill Brace, P&G's vice president of North American Personal Care said in a statement that this addition will help P&G to expand its portfolio that already includes Secret, Old Spice and Gillette, to reach consumers avoiding ingredients like parabens and aluminum.

Consumers have become extremely vigilant of the ingredients used in products. Native’s website proclaims its brand as "deodorant that isn't a science experiment.”

The purchase not only gives P&G another beauty brand in the field of natural ingredients, but also gives a solid foothold in digital sales. The Cincinnati-based consumer products giant said Native would appeal to consumers, who buy natural personal care items online and not in stores.

Again, the acquisition could be an answer to Peltz, who in his quest for a seat on P&G's board, had earlier criticized the company for being slow in adapting to innovations and insisted on taking over small, on-trend companies. P&G, however, has largely focused on streamlining operations by divesting rather than acquiring in recent years.

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P&G’s shares have gained 5% so far this year, comparing unfavorably with the growth of the Zacks Investment Research

Written By: Zacks Investment Research