January 19, 2021

Nestlé Stock Rises Following Share Buyback Announcement

PARIS — Nestlé stock was on the rise in early afternoon trading on Wednesday, hours after the Swiss conglomerate, under pressure from an activist investor, announced that it would initiate a share buyback program of up to 20 billion Swiss francs (18.33 billion euros, or $20.83 billion, at current exchange rates).
Citing the favorable context of low interest rates and strong cash flow generation, Nestlé said in a statement that “share buybacks offer a viable option to create shareholder value.”
By 12:20 p.m. CET, Nestlé stock was up 1.7 percent to 85.75 Swiss francs.
As reported, late on Sunday night Dan Loeb’s hedge fund Third Point sent a letter to investors saying it now owns about 40 million shares, or 1.25 percent, of Nestlé. Third Point argued for the Vevey, Switzerland-based maker of Kit Kat, Alpo and Gerber baby products to divest its 23.1 percent holding in L’Oréal, which it deems nonstrategic, among other suggestions.
The following day, both Nestlé and L’Oréal’s stocks surged around 4 percent on the news.
Nestlé said on Tuesday that the company’s board of directors had approved the buyback program due to start on July 4. It will be completed by the end of June 2020.
Nestlé added: “The volume of

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