Nelson Peltz’s Trian Fund Management has accumulated $2.5 billion in General Electric (GE.N) shares since May — a roughly 1 percent stake — making it one of the company’s top 10 shareholders, the Wall Street Journal reported.
In a white paper Trian plans to disclose publicly on Monday, the activist investor firm calls for GE to step up cost cuts, consider getting rid of even more of its finance arm and be more cautious on acquisitions, the newspaper reported.
Trian said GE could take on $20 billion in debt and repurchase shares, the newspaper said, citing the white paper.
Trian believes GE’s stock could get to $40 or $45 if the company follows the investor’s plan, the newspaper said. GE shares closed at $25.47 on Friday on the New York Stock Exchange.
GE Chief Executive Jeff Immelt told the Journal that while he disagrees with some of Trian’s points, he is in accord with most. “The repurchase opportunity is right in front of us,” the newspaper quoted him as saying. (on.wsj.com/1PegKOk)
While Trian has some criticism of the company, both sides say they agree on most aspects of GE’s current direction, which includes the sale of the majority of its giant financing arm. Trian has not requested a seat on GE’s board, the Journal reported.
The U.S. conglomerate said in April it would seek to sell some $200 billion of its GE Capital assets as it moves away from financial services and focuses more on manufacturing jet engines, power turbines and other big-ticket industrial equipment.
Over the past couple of years, Peltz has targeted DuPont (DD.N) and PepsiCo Inc (PEP.N) among others, demanding board seats and asking them to separate their fast-growing businesses from the ones where growth had stagnated.
Prior to the wave of activist campaigns during the last few years, companies often resisted the approach of activist hedge funds, thwarting their efforts to shake-up management or restructure their businesses. But the growing cash piles and clout amassed by activists have granted them more board access.
Reuters could not immediately reach Trian or GE for comment outside regular U.S. business hours.
(Reporting by Supriya Kurane in Bengaluru- Editing by Anupama Dwivedi)
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