Danone: how investment funds obtained the departure of Emmanuel Faber

Checkmate.

The part delivered by Emmanuel Faber turned out to be fatal.

The charismatic CEO of Danone, a French agribusiness giant, was ousted at the cost of a long capitalistic battle, where rebellious management funds - in addition Anglo-Saxon - took part in the round table to play the troubles parties at the owner of the Evian, Badoit, Activia or Blédina brands.

The one who had accumulated all the powers of CEO and CEO since 2017 had to face the facts, dropped by his board of directors and even by Franck Riboud, the son of the founder of the multinational, who had yet appointed him as its successor in 2014.

The personality of this great 57-year-old boss, at the head of 9,000 employees in France, and 100,000 in the world, dismissed on Sunday "with immediate effect" by his board of directors, is no stranger to this blow. strength.

"Intransigence", "rough management" and "solitary exercise of power" are qualifiers that keep coming back about him.

"He is a complex character, extremely demanding of others and of himself," says Pascal Lamy, former European Commissioner and chairman for nine months of the independent mission committee at Danone.

Others would call him a monk-soldier, since he practices asceticism and religion.

"

A huge thank you to my dear @Danone teams who bring its mission to life every day.

During 24 years of my life, you have made me grow among you, as a man, and as a leader.

A privilege.

Each one, each one, stay true to yourself.

You rock.

pic.twitter.com/s5hiLmBQGu

- Emmanuel Faber (@EmmanuelFaber) March 16, 2021

The CEO job has turned into an ejection seat

But as a good leader, this mountain enthusiast, born in Grenoble (Isère), also knew how to train behind him and convince his audience.

Emmanuel Faber could be accessible, "very attentive, almost a sponge for that matter", in the words of Christiane Lambert, president of the National Federation of Farmers' Unions (FNSEA) and had succeeded in federating the unions. House.

“He was open, always ready to discuss strategy, notes Laurent Pouillen, FGTA-FO Danone coordinator.

He had given up his hat retirement, which is not the case with all big bosses.

"

A man of convictions, the manager had made a strategic shift to make Danone "a company with a mission", reconciling the search for economic performance with the contribution to the general interest, which would have functioned in the long term according to a regional logic (the plan "Local First").

“It aims to make the capitalist model economically, socially and environmentally sustainable.

With him, this triangle "à la Delors" is an obsession, "says Pascal Lamy.

His farewell letter, sent this Thursday to employees, urging them to continue with his reforms, proves it.

The departure of two key managers

The elimination provided for by the plan of 2,000 jobs, including 400 to 500 in France, had however somewhat tarnished this image of social boss.

And the CEO was isolated within his board of directors, which wanted to separate the functions of chairman and chief executive officer, a trend that is becoming widespread at the head of large listed companies.

"The departures, in quick succession, in October, of two employees in key positions, put Emmanuel Faber in a weak position and authorized the rebellious funds to come out of the woods", underlines Frédéric Ponchon, equity manager at Sycomore AM.

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The English Bluebell and the Californian Artisan Partners, activist investment funds, respectively holding 0.15% and 3% of Danone's capital, entered the dance in the fall.

“In general, they become shareholders to make things happen or change governance,” explains Frédéric Ponchon.

Taking advantage of the break-up of the group's capital, they attacked on two fronts: governance and the strategic shift.

But the dialogue with the CEO was not going well.

Not good at all, even.

Right in his boots, Faber wanted to carry out his project at all costs.

Artisan Partners raised the tone and made the departure of the Frenchman a necessity.

"The expected profits will be compromised by the retention of Mr. Faber," wrote the investment company with 134 billion dollars (112 billion euros) in assets, addressing members of the board of directors.

Performance deemed insufficient on the markets

The attacks eventually hit the mark, convincing the administrators to let go of the leader.

"This same council which had approved 98% of the plan" Local First "in November, rejects it a few months later", notes, circumspectly, Denis Branche, deputy managing director of Phitrust, company of ethical investment, present in the capital of Danone.

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Despite the crisis linked to the epidemic and a lack of visibility on the infant nutrition sector in China, Danone is nevertheless doing well with earnings per share increasing by 8% per year over the period 2014-2019.

A performance nonetheless deemed insufficient by the markets, and shareholders, in particular, compared to the other agribusiness giants, Unilever and Nestlé.

Concern over the price of milk and employment

For some, this eviction in any case consecrates the short-termist vision of activist funds.

Artisan Partners denies this, indicating that it has been in the capital of another French flagship, Sodexo, for fifteen years.

“What happened fundamentally marks the fragility of French capitalism, whose shareholding is too fragmented, laments a French boss of mass distribution.

This is the case with many large French companies, which are helpless when a predator arrives.

“For not having been able to deal with these newcomers, the former director of Danone took the door.

Faced with the blank sheet that remains to be written, many are worried.

Including Christiane Lambert, from the FNSEA.

“All this shows the difficulty of the world according to: the bad reflexes are still there.

All this is not a good signal for the agricultural world: isn't the risk, in the long term, that Danone will want to buy milk cheaper, in order to make more profits?

"

The unions are waiting to know which organization will be set in motion - the “Local First” plan, with a reorganization by country?

- or not.

Because employment is now a major concern.

Several organizations have expressed their concern, and asked this Thursday for an emergency interview with the new strongman of the group, Gilles Schnepp, appointed president.