Meister's Corvex Said To Take $400M Stake In Danone

Aug 14 2017 | 5:56pm ET

Keith Meister’s activist hedge fund Corvex Management has reportedly taken a $400 million position in French yogurt maker Danone, believing it to be significantly undervalued relative to its peers.

Corvex believe the company’s stock, which is down more than 3% this year in local terms, will reverse course if management makes progress revamping operations and takes better advantage of healthy living trends, according to a Bloomberg article citing unidentified individuals familiar with the matter. The hedge fund manager, which typically pursues an activist strategy with regards to portfolio companies, does not yet plan to publicly seek management changes or board seats, the article continued. 

As is common upon news of a well-known activist taking a stake in a large firm, Danone’s stock rose Monday to close at €66.42, up more than 2.5% from Friday’s close. Even before the news of Meister's stake, the Paris-based company was increasingly seen as a potential takeover target.

Corvex has undoubtedly zeroed in on the valuation disparity between Danone and its foodstuff peers in Europe; Danone’s P/E ratio of 22.5 is lower than Nestle’s 27.4. Meanwhile, its stock has sat out the equity market rally so far this year while Nestle is up more than 13%. 

Meister, who founded Corvex in 2011 with $250 million in seed capital from George Soros, was CEO of Icahn Enterprises from 2003 to 2003 and is a protégé of billionaire activist Carl Icahn. The company manages approximately $5.5 billion in mostly equity investments, special situations and distressed securities largely in North America, and recently disclosed a stake in global oil and gas company Energen Corporation. 

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