Heinz, the iconic ketchup manufacturer, bowed to pressure from a rebel shareholder yesterday and promised to slash 8 per cent of its global workforce.
The company is trying to halt the billionaire investor Nelson Peltz's plan to place his own nominees on the board and force through even more radical cost-cutting measures.
Some 2,700 jobs will go across the company, including 600 in Europe. Employees at seven factories across the UK and Ireland are waiting to see where the axe will fall. The UK and Ireland accounts for about 50 per cent of Heinz's European business.
Mr Peltz and his Trian Fund Management group have built a 5 per cent stake in Heinz, claiming it has been poorly managed and that the share price has underperformed rivals. He wants Heinz to return more money to shareholders, divest more assets, and cut costs by $575m (£308m) annually. Trian has launched a proxy fight to put five representatives on Heinz's 12-member board.
Heinz said its restructuring plan will cut $355m in costs, freeing up money to develop new products. It pointed to new baked bean toasties as an example of its ability to innovate. The company will also be returning $1bn to shareholders through share buy-backs over the next two years.
William Johnson, Heinz's chief executive, said the restructuring had been in the works for 18 months, since long before Mr Peltz began agitating for change. He said: "The company simply cannot let the board and management be distracted by the creation of a destabilising situation and so the board was unanimous in its rejection of Mr Peltz's proposal."
Heinz employs 5,000 people across seven factories in the UK and Ireland. The biggest, in Wigan, employs 2,000 people making its best-selling baked beans and soups. Weight Watchers ready meals are made in Dundalk, and desserts are made in Leamington Spa.
A company spokesman said employees would be informed of factory closures and job losses over the next two months.
The company said that further job cuts are being considered for next year.Reuse content