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Could Colgate-Palmolive be headed for a break up?

A Wall Street Journal report notes that an activist challenge to Colgate-Palmolive has stirred a discussion over the possibility of whether and how the consumer giant could ultimately be broken up.

An activist challenge to the consumer goods giant Colgate-Palmolive has drummed up a discussion over whether and how Colgate-Palmolive could be broken up. Although a break up may not be imminent, the conversation could ultimately lead to many far-reaching outcomes, according to a Wall Street Journal report

In a quarterly investor letter Oct. 18, Third Point, led by the activist investor Dan Loeb pointed out that the company’s stock was a perennial underperformer, the report noted. 

[Read more: Perfect, Colgate debut AR-powered teeth whitening experience]

The WSJ report said this assessment isn’t unjust, pointing that over the past five years the company has posted a total return including dividends of just 19.5% according to FactSet. That compares with 61.2% for the S&P 500 and 56.9% for its Consumer Staples sub index.

Colgate Palmolive has four broad categories, oral care, including its namesake toothpaste; home care including its namesake dish detergent as well as Ajax; Personal Care, including speed stick deodorant and Irish Spring soap; and pet care with Hills Pet Nutrition, a  high end pet food brand sold mainly through veterinarian and other specialist channels, the report stated. 

[Read more: Colgate-Palmolive adds twist to oral care via CO. by Colgate]

"Third Point’s most headline grabbing assertion was that Hills might be better off on its own. This got a cold reception from the company and some analysts. Bernstein’s analyst Callum Elliott dismissed the idea, saying in a note that over the past 10 years, Hills has contributed more than 100% of the revenue and profit growth of the overall company," the report stated.  

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