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Nelson Peltz exploring possible Estée Lauder shakeup: sources

Billionaire Nelson Peltz is exploring a possible shakeup at Estée Lauder that could include ousting the longtime CEO of the cosmetics giant — and possibly pushing for a turnaround and eventual sale of the company, The Post has learned.

It couldn’t immediately be learned whether Peltz — an activist investor who recently prodded Walt Disney Co. to slash costs, prompting 7,000 job cuts under CEO Bob Iger — has acquired shares in Estée Lauder.

Nevertheless, insiders say Peltz appears to be mounting a shareholder campaign that could have Estée Lauder CEO Fabrizio Freda in its crosshairs, according to sources close to the situation.

“A number of directors and institutional investors think the CEO has lost his touch,” the source said. “They are now recruiting shareholder activists.”

Peltz declined to comment when reached by The Post on Sunday.

Estée Lauder’s share price fell 17% last Wednesday following a weak earnings report, stoking speculation that the New York- based cosmetics company is Peltz’s next activist play, the source said. The stock slightly rebounded by Friday’s close to $203.54 — but it was trading as high as $280 on Feb. 1.

While there may be room to slash costs and rejigger Estée Lauder’s brands, sources said an outright sale of the $72 billion company could be Peltz’s bigger goal.


Nelson Peltz
Peltz recently prodded Walt Disney Co. to slash costs, prompting 7,000 job cuts under CEO Bob Iger.
REUTERS

Before the pandemic hit in 2020, French luxury conglomerate LVMH — headed by Bernard Arnault, the world’s richest person — signaled to the company’s controlling Lauder family it would be interested in buying Estée Lauder if it ever came up for sale, two sources with close knowledge of those talks said.

“Buying Estée would give Arnault the biggest competitor to L’Oreal — and he hates L’Oreal,” a source close to the situation said.

The founding Estée Lauder family, however, controls the stock, and would have to approve any sale. Chairman emeritus Leonard Lauder, 90 years old, is still active in the business and is believed to be against selling the company, so any deal would likely have to wait until he dies, sources said.


Leonard Lauder
Leonard Lauder brought in Freda as CEO in 2009.
Patrick McMullan via Getty Images

Meanwhile, there are only four Lauder family members on the 16-member board and a majority of directors could replace the CEO with an executive who could cut costs, revive marketing and roll out new brands, sources said.

Leonard Lauder brought in Freda as CEO in 2009 and likes him, a cosmetics industry source said. Freda replaced Leonard Lauder’s 63-year-old son William, who had served as CEO for five years. William was pushed upstairs to become the company’s executive chairman — but it’s still his father who’s running the show, according to a source.

“Leonard is still the most active family member involved,” the source told The Post. “William is active but has less of a role.”


Mary Ann Freda and Fabrizio Freda attend the 2023 Met Gala.
Mary Ann Freda and Fabrizio Freda attend the 2023 Met Gala.

Nevertheless, “Peltz would need William on his side” to sell the company, the source added.

In his last major proxy fight, Peltz pushed for an overhaul at Disney after buying almost $1 billion in stock in November. In February, he dropped his demand for a board seat endorsing a plan to cut $5.5 billion in annual spending. The activist made a 17% paper profit on his shares, according to reports.

The 77-year-old conglomerate — whose brands include Aveda, Clinique and Le Labo — cut its annual sales forecast last week, saying it expects a drop of 10% to 12%, wider than its previous outlook for a 5% to 7% drop.


Danielle Lauder and William Lauder
Danielle Lauder and William Lauder at the 7th Annual Hollywood Beauty Awards at Taglyan Complex.
FilmMagic

Freda is rated among the 100 most overpaid CEOs with compensation that totaled $66 million last year, according to a 2023 report by As You Sow, a nonprofit group.

Seventy percent of Estée’s institutional shareholders voted against that pay package.

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