This article first appeared on GuruFocus .
Elliott Investment Management has taken an almost 5% stake in Bunzl Plc ( BZLFF ), turning up the pressure on the UK distributor after last year's profit warning triggered a sharp slide in the shares. The activist investor is pushing Bunzl to buy back shares equal to as much as 10% of its total market capitalization over the next 12 months, according to people familiar with the matter. Bunzl shares rose as much as 3.7% on Monday and were up 1.4% at 9:45 a.m. in London, leaving the company with a market value of around 8.3 billion, or $11.2 billion.
Elliott's campaign could put a brighter spotlight on a company that has long attracted patient investors through more than three decades of uninterrupted dividend growth. The activist is also urging Bunzl to launch a strategic review focused on its North American business, the company's largest market, where operational challenges contributed to last year's profit warning. A review could possibly open the door to private equity interest, especially after British companies such as Intertek Group Plc ( IKTSY ) and DCC Plc ( DCCPY ) became buyout targets after taking steps to simplify their portfolios.
The core argument is valuation. Elliott believes Bunzl's North American business operates independently, shares few synergies with the rest of the group, and could possibly help lift the company's valuation if separated, according to people familiar with the matter. Competitors trade around 40% to 50% higher on a forward price-to-earnings basis, while Bunzl has already slowed both dealmaking and buybacks, completing eight transactions in 2025 after 15 the previous year and repurchasing 200 million of shares through 2025 after buying back about 250 million in late 2024.
