- 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.