Danone: "The eviction of Emmanuel Faber was inevitable"
The sling of shareholders who consider Danone not profitable enough finally got the better of Emmanuel Faber.
AP - Pavel Golovkin
Text by: Ariane Gaffuri Follow
5 mins
The board of directors gave in to the demands of Danone's shareholders, in particular two foreign investment funds which have been attacking Emmanuel Faber for months and his strategy deemed inefficient against the competition.
The 57-year-old businessman had already had to give up the post of managing director at the beginning of March.
Gilles Schnepp, 62, former CEO of Legrand, the French manufacturer of electrical equipment, was chosen to replace him and to find a new CEO.
The lighting of Laurens Lafont, editor-in-chief of La Lettre d'Investissement.
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RFI: What is your reaction to the “
effective immediately
”
eviction
of Emmanuel Faber
?
Laurens Lafont
: I think it was inevitable.
At the beginning of the month, we had a decision of the board of directors which was "in between", that is to say that it was at the same time happy to the shareholders by withdrawing the general management from Emmanuel Faber, but leaving him the presidency at the same time.
That is to say that we were on something mixed and it was untenable because Emmanuel Faber wanted to retain power, in a way, he wanted to choose a general manager who was going to have to implement his plan, however, this is not at all the objective of his eviction.
The objective was to really change Danone's strategy.
It was therefore inevitable, and when we see the reaction on Monday March 15 from the markets - the group's share is up by around 3.5% - this time there is a kind of relief, the page is turned and Danone will finally be able to be taken back in hand.
Shareholders, but above all two activist funds, have been pushing for this change in governance and strategy within Danone for months. These are mainly the American Partisan Partners, Danone's third shareholder with 3% of the capital and the British BlueBell Capital which owns 1% of the assets. Who are these activist funds?
They are called activist funds, but they are investment funds, quite simply, whose strategy is to take a stake in a group that they consider poorly managed or having better potential than the one that is being exploited.
They take a few percentages and they try to influence a change in governance or asset disposals or acquisitions.
They provide advice on the company's strategy.
Their goal is to improve the investment they are making and they hope for a shift that will allow them to make a profit.
Today, activist funds are delighted with this decision, but many shareholders are happy too.
Small shareholders are not often heard in the management of large groups like Danone, and even if these funds only have around 3% of the group's capital, they represent a lot of people and a lot of small shareholders who are unhappy with the strategy.
Do these activist funds question Danone's raison d'être since 2019 as a company with a mission, with social and environmental objectives in addition to lucrative?
No, the company with a mission is very recent and Emmanuel Faber's career at the head of Danone goes back much further.
He has been chairman of the group for three years, but has been managing director for seven years.
You have a group that shows lower growth and profitability compared to its direct competitors (Swiss Nestlé, American Unilever), and which recently announced staff reductions - around 1,500 to 2,000 job cuts in 100,000 in the world - because the group is not on the right track.
So you can call yourself a company with a mission, but if you are not in a position to have a positive impact on the company itself, that is a form of hypocrisy.
No, it is not the mission company that is targeted, it is several years of underperformance and a strategy that has not borne fruit.
After a while, it is therefore normal that the person responsible for this strategy is sanctioned.
When a company is doing badly, we often consider it a shame that it is laying off, for once, it is the CEO who is laid off.
From a governance point of view, it's pretty healthy to see this rather than keeping him at the head of the group.
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