LONDON, UK / ACCESSWIRE / September 13, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for The Procter & Gamble Co. (NYSE: PG) ("P&G"), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=PG. The Company announced on September 11, 2017, came out strongly against Trian Fund Management, L.P. ("Trian") and activist investor Nelson Peltz's sustained efforts to pressure the Company and its shareholders to reorganize its business. In a communication addressed to its shareholders, David S. Taylor, P&G's Chairman, President, and CEO, has explained the Company's stance in detail and how Trian and Nelson's ideas for the Company are flawed. For immediate access to our complimentary reports, including today's coverage, register for free now at:

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Commenting on the matter, David said:

"P&G is a profoundly different, much stronger, and more profitable Company than it was just a few years ago. Now is the time to build on our momentum and prevent anything from derailing the work that is delivering results."

The head on tussle between Nelson and P&G's management has intensified recently and is gaining importance given that the Company has scheduled its Annual Meeting of Shareholders for FY17 on October 10, 2017. The Company's shareholders would be voting on various matters including the election of 11 directors to the Board, approve the Company's executive compensation, etc. The Company has been continuously fighting against the pressure created by activist investor Nelson and has urged its shareholders against voting for him to the Company's Board.

P&G's stance

P&G's stance is very clear that it is already on the right track for growth and that Nelson's ideas are not aligned to the Company's growth strategy. The white paper issued by Nelson had made several suggestions for improving the overall performance of the Company. Countering each of the points raised by Nelson the Company has crafted its response.

Countering Nelson's suggestion of dividing the Company's business, P&G feels that it is a typical "cookie-cutter" activist plan. P&G already has a simplified structure where its business is divided into categories with the leader of each category responsible for the business and its bottom-line. P&G feels that Nelson's idea of dividing the Company would be a costly exercise and would lead to higher costs, lower efficiency, reduced profits, and add an extra layer of management complexity.

Nelson had said that the Company has not performed well in the last 10 years and shareholders were not getting value for their investment. P&G has replied that it has a robust productivity program in place which has resulted in over-delivery on its first $10 billion productivity goal and a savings of up to $10 billion despite a negative foreign exchange impact of over $7 billion. The increased productivity has enabled the Company to focus on investing in R&D, improving sales, and expanding its product offerings to consumers.

Nelson also stated that P&G is losing market share due to aging brands and lack of innovation. P&G has pointed out that it consistently dominates the IRI New Product Pacesetter rankings as the #1 Company for successful new product innovations. It has delivered completely new brands like Always Discreet and Unstoppable plus also introduced new variants in existing brands viz., Tide PODS, Ariel PODS, Gain FLINGS, Pampers Pants, Always Radiant, and Oral-B Genius. Apart from this, the Company has also upgraded its brands like Dawn, Fairy, Charmin, Bounty, Head & Shoulders, SK-II, Old Spice, and Vicks to ensure continued growth.

Nelson had said thatP&G had not capitalized on the digital media and its use to reach out to customers. P&G has countered that the Company's overall e-commerce sales grew by approximately 30% in the last fiscal year and it has managed to increase its share in eight out of 10 categories via ecommerce in the same period. The Company's sales through its digital platform were over $3 billion, which was higher than the combined ecommerce sales of two of its competitors. The Company has made in-roads across multiple brands impacting people in all life stages, including millennials by using digital media for advertisements.

P&G has also urged its shareholders not to vote for Nelson's nomination to the Company's Board. The Company's stance is that Nelson's has an outdated and flawed understanding of P&G's business in the current context. P&G already has a solid action plan in place and is taking informed decisions to reach its set goals. The Company is successfully executing a winning strategy and has strong momentum and the inclusion of Nelson to the Company's Board carries the risk of derailing this progress. Also, Nelson has more experience with food and beverage Companies and not with household and personal care Companies and hence does not have the right experience to contribute to the Company's growth.

History

Nelson Peltz is the Founding Partner and CEO of Trian Fund Management, L.P. He and his investment firm have been investing in P&G since 2016 and is one of the six largest investors with their stake in the Company currently valued approximately $3.5 billion. The problem started in July 2017, when Nelson filed a preliminary proxy statement with the US Securities and Exchange Commission (SEC) looking to be elected to the Company's Board. His interest in becoming the member of P&G's Board was to help the Company in regaining its lost market share and unlock shareholder value by implementing some of his ideas. The Company's management and Nelson have had several meetings to understand his ideas and plans. However, P&G did not agree to his ideas nor was it keen to induct him in the Company's Board. Nelson has been repeatedly criticizing P&G for its performance over the past ten years.

Finally, even after sustained pressure, when P&G's Board and Management did not give credence to his ideas, he issued a 94-page long white paper on September 06, 2017. The white paper outlined his ideas in detail and included suggestions for reorganization of P&G's overall business by dividing it into three main business units - Beauty, Grooming & Health Care, Fabric & Home Care and Baby, Feminine & Family Care. Other ideas included making the management team accountable for delivering promised returns, engage in M&A, use of digital medium for growth, bringing fresh blood in top management, improving corporate governance, including aligning management compensation with market share gains.

The matter now solely rests in the hands of the Company's shareholders, who are divided. Many strongly support current CEO David and his team while there are those who agree with Nelson.

Last Close Stock Review

On Tuesday, September 12, 2017, the stock closed the trading session at $93.51, slightly down 0.51% from its previous closing price of $93.99. A total volume of 5.80 million shares have exchanged hands. Procter & Gamble's stock price advanced 6.19% in the last three months, 2.76% in the past six months, and 5.96% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have surged 11.22%. The stock is trading at a PE ratio of 25.38 and has a dividend yield of 2.95%. At Tuesday's closing price, the stock's net capitalization stands at $238.79 billion.

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