Trian Taking a Board Seat Could be Just the Ticket for Undervalued Wide-Moat Unilever

Trian Partners, led by Nelson Peltz, has accumulated a 1.5% stake in Unilever and taken a seat on the board, in a move that we believe could finally be the catalyst to unlock value at Unilever. Even after the very positive market reaction to the news, Unilever was trading at more than 10% discount to our fair value estimate as at the close of business on May 31, and it appears to us to be one of the more attractive investment opportunities in the developed market fast moving consumer goods, or FMCG, sector at present. When stripping out Unilever’s 62% economic interest in Hindustan, which we estimate represents around 25% of its enterprise value, the remaining assets of Unilever are trading at just 11 times EV/EBITDA, below other developed market FMCG companies. We retain our EUR 50 fair value estimate and wide moat rating.