Nestlé to buy back 18 billion euros' worth in shares

Nestlé aims to buy back 20 billion Swiss francs’ worth of shares, several days after a new shareholder encouraged it to do so. Activist investor Dan Loeb only owns 1.3 % of Nestlé shares, but apparently has a major influence in the Swiss company.

Focus on growth categories

When it announced its intention to buy back shares, Nestlé did not refer to new shareholder Loeb, but sources reveal he sat down with CEO Ulf Mark Schneider two weeks ago to discuss business strategy. The company also revealed its most important investments will focus on important growth categories, like coffee, animal care, children’s food and healthcare.

The American investor only acquired a 1.3 % stake in Nestlé, worth 3 billion euro, several days ago. He immediately said he would use his position to enforce changes, because he feels the food manufacturer is too austere. Loeb is known as a “activist investor” and already tried to push his ideas onto Yahoo, Sony and Sotheby’s.

He wants Nestlé to sell its 23 % stake in L’Oréal in order to buy back its own shares and increase profit margins from 15 to 18 – 20 %. Loeb feels Nestlé has been playing it safe for far too long, which is the reason the company has “underperformed” for years, he said.