Pernod CEO pursues change and engages activist shareholder
* CEO says talks with Elliott centred on governance and
* Accepts change is needed in ruthless pursuit of value
* Activist Elliott has accused Pernod of being too insular
(Adds detail on voting rights; changes headline; updates
By Martinne Geller
LONDON, Feb 12 (Reuters) - Pernod Ricard will
embrace change and continue "constructive" talks with activist
investor Elliott Management, CEO Alexandre Ricard said on
Tuesday while dismissing speculation that the company could
become a takeover target.
The world's second-biggest spirits group behind Diageo
is under pressure from New York hedge fund Elliott
Management to improve profit margins and corporate governance.
Last week Pernod vowed to lift its margins and shareholder
returns in a three-year strategic plan that Elliott described as
a first small step.
Chief Executive Ricard, the grandson of the French drinks
group's founder, said he welcomed Elliott's perspective.
"We met in January. We will continue to have an open
dialogue with Elliott in the coming weeks or months, as we do
with other shareholders," he told Reuters.
A spokeswoman for the fund declined to comment on Tuesday.
Ricard said talks with Elliott centred around governance and
margin improvement, adding that Pernod is a consolidator rather
than a takeover target.
"I hope there will be no surprise if I reiterate very
clearly and specifically -- Pernod Ricard is here, Pernod Ricard
is here to stay and Pernod Ricard is and will remain a
Elliott's arrival has raised speculation of potential
dealmaking. A source close to the matter told Reuters in
December that Elliott had suggested options such as merging with
another spirits company.
Ricard declined to comment on the likelihood that Elliott
would seek a seat on the board of the maker of Absolut vodka and
Pernod shares closed down 1.3 percent.
Pernod's 46-year-old CEO, who once worked as an M&A
consultant at U.S. bank Morgan Stanley and appeared
bare-chested at his desk in an internal promotional video last
year, acknowledged that change is necessary for success.
"The mandate I think I've been given is quite clear. It's to
consistently and ruthlessly pursue value creation over time,"
"If you want a company to succeed and stay over time, that
company needs to transform itself permanently. Consumers change
over time, the environment changes, the dynamic changes -- if
you don't keep transforming yourself, it's not going to happen."
He declined to say whether having Elliott as a shareholder
helped him to push the message on the need for change within the
company, or what governance initiatives might be in the
When asked about double voting rights for longtime
shareholders - which are often granted by French companies after
two years - Ricard said there were no plans to change the
company's practice of affording them only after 10 years.
One source had told Reuters the company's current policy
limited the influence of outsiders. However, Ricard said the
rights were open to all qualifying shareholders, not just those
close to the Ricard family.
(Reporting by Martinne Geller; Editing by David Goodman and Jan
First Published: 2019-02-12 12:44:12
Updated 2019-02-12 22:04:39
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