The Beauty of Activism

The Beauty of Activism

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  • Shares of Estée Lauder rose following reports that billionaire Nelson Peltz is contemplating a shareholder campaign against the cosmetics company. Peltz, the founder of Trian Fund Management, may launch an activist campaign that aims to replace Estée Lauder CEO Fabrizio Freda and explore a potential sale of the company, sources said. The New York Post reported that it was unclear whether Peltz had already purchased shares in the firm.
  • Estée Lauder's shares rose by 1.8% to $207.10 in early morning trading due to the potential of an activist campaign, while the S&P 500 remained unchanged. Despite shedding 17% this year, the company's sales growth has slightly lagged behind its prestige beauty peers since 2018, particularly in China, one of its largest markets, as it navigates a challenging operational environment there. 

Why it matters

Earlier this year, Peltz targeted Walt Disney, which resulted in the company announcing $5.5 billion in cost reductions and reinstating its dividend - a significant win for the activist investor. However, Peltz might face a more challenging task with Estée Lauder, as the Lauder family holds 84% of the voting power and four out of 17 board seats.


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