Food-making giant HJ Heinz has rejected recommendations made by hedge fund Trian Fund Management concerning the way in which its business is conducted.
The Cayman Islands-based fund, managed by billionaire Nelson Peltz, initially urged the company to make drastic changes to its business strategy, including a slashing of annual costs by $575 million, selling assets and focusing more on its core brands.
Trian Fund Management hopes to boost share-value for the company, which it says is far less than its potential, providing less than impressive returns for investors.
The fund itself currently has a 5.4 per cent stake in the packaged-foods company.
Following the submission of the recommendations to the US's Securities and Exchange Commission (SEC), Heinz share prices rose by as much as five per cent to reach nearly $43 a share – but only half what Trian believe the share price has the potential to be.
However, Heinz say they will reject the proposals, arguing that they are not in the best interests of all Heinz shareholders, and would be crippling to the company's business.
This is only the latest clash between big business and the increasingly influential hedge funds that invest in it.
With hedge funds so reliant on the performance of these companies for their high investor returns, fund managers are taking an increasing interest in how they conduct their business operations.