Nestle to buy back £16.22bn worth of shares

Nestle factory in Halifax
Nestle factory in Halifax

Food giant Nestle plans to buy back as much as £16.22bn worth of shares over three years just days after US activist shareholder Third Point began a campaign to boost performance at the company.

The New York-based hedge fund, controlled by billionaire investor Daniel Loeb, has started pushing for Nestle to more aggressively boost performance and buy back shares.

Nestle, which has sites in York and Halifax, said its announcement was the result of a review of its priorities that had begun in early 2017. It did not mention Third Point in its statement and Third Point declined to comment on the announcement.

However, Nestle’s chief executive Mark Schneider, who took over at the start of the year, said at the company’s first-quarter results presentation in April that he understood from meetings with shareholders they wanted to see “meaningful steps towards improved combinations of growth rates and margins”.

These comments and the fact that buyback plans take time to get regulatory approval before being announced mean that Nestle would have submitted the plan before Third Point made its position public late on Sunday.

Kepler Cheuvreux analyst Jon Cox said there was no big surprise in the company’s statement, but it had initially planned to release this at its investor day in September.

It was not clear, however, whether feedback that Mr Loeb might have given in a meeting earlier this month was taken into consideration when Nestle crafted the final buyback plan, which will start on July 4.