Nestle made its first concession to activist investor Dan Loebwhen it announced Tuesday a $21 billion share buyback plan to boostits stock price. Don't expect Loeb's Third Point to stop there.
Loeb is pushing for Europe's largest company to follow many ofits blue-chip peers in sacrificing its top-notch credit ratings tocapitalize on rock-bottom interest rates.
Two days after the hedge fund manager announced his stake inNestle, the company announced the share repurchase plans, whichwould boost its leverage to 1.5 times a measure of earnings by 2020from a ratio of about 1 time. That's unlikely to please Loeb, whois urging the packaged food giant to increase leverage to at least2 times to “produce enormous capacity for share buybacks,”according to a letter to investors in his hedge fund ThirdPoint.
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