Bill Ackman, the activist investor, has received clearance to take a stake in Procter & Gamble in a sign that he could become a new source of pressure on the company, which has lost the faith of some investors.
Pershing Square, the $11bn New York hedge fund run by Mr Ackman, has a history of agitation at consumer-focused companies, including McDonald’s, Target and JC Penney. Following news of his involvement shares in the world’s biggest consumer goods group by sales climbed 3.8 per cent to close at $63.70.
P&G said that Mr Ackman had received clearance from the Federal Trade Commission, but it could not confirm if he had made an investment.
Long-respected for its meticulous management, P&G, based in Cincinnati, has been battling lately to revive its profits growth, cut costs and win back the confidence of investors.
In June, Bob McDonald, chief executive for the past three years, admitted that the company had made errors. He cut its earnings and revenue forecasts and vowed to halt expansion into new markets.
Mr Ackman, whose most recent campaign saw him oust the management of Canadian Pacific, the railroad company, has a history of taking large stakes in companies and then pushing for change. He pressured McDonald’s to sell stores and is part of an ongoing turnround at retailer JC Penney, where he has joined the board.
However, Mr Ackman has not always found success, losing a 2009 shareholder vote at retail chain Target, where he had proposed a spin out of the group’s property holdings.
Ali Dibadj, analyst at AllianceBernstein, said in a note that while it was not certain that Mr Ackman would take a stake in P&G, “such a development could serve as the positive catalyst we (and others) have been waiting for”.
Mr Dibadj has long argued that P&G can fulfil its potential by cutting costs and lowering prices. But he added: “We also are open-minded that if real progress is not seen by the end of the year, larger decisions may have to be made in Cincinnati that could also lead to value accretion (change in management, break-up of the company).”
P&G said: “We welcome investment in our company. We are focused on creating shareholder value by executing on our plan to deliver top and bottom line growth through our $10bn cost savings program, renewing our focus on innovation, pricing initiatives and improved execution, and reallocating resources to invest in the highest return opportunities.”