Reckitt Benckiser Group PLC (LSE:RKT, ETR:3RB), the consumer goods giant, could have an activist investor to worry about, adding another headache for management as its shares continue to slip.
Eminence, the asset management firm known for spearheading an activist campaign against Ladbrokes owner Entain, has built around a 0.5% stake in Reckitt, reports revealed.
Stakebuilding at the US firm began back in March when Reckitt shares plunged to one of their lowest points in the last decade.
It came after a US jury ruled that its baby formula division, which sells the product Enfamil, was at fault for the death of a premature infant.
Reckitt was forced to pay US$60 million in damages. However, analysts are concerned this could be only the tip of the iceberg.
Total liability for the baby formula cases could cost the FTSE 100 firm anywhere between £400 million and £8 billion.
This overhang is suppressing the Durex and Clearasil maker’s share price, which is down more than 18% this year, having lost over US$7 billion in value.
Reports believe the emergence of Eminence in Reckitt could lead to its baby formula division being spun off or sold.
Eminence is believed to be dissatisfied with management’s ability to grow operating margins, reports added.