Bunzl PLC (LSE:BNZL) is facing fresh pressure to overhaul its North American operations after activist investor Elliott Management reportedly built a stake of almost 5% in the FTSE 100 distributor.
Elliott is said to be pushing for a strategic review of Bunzl’s largest division, alongside a share buyback programme worth up to 10% of the company’s market value.
The intervention comes ahead of an expected trading update from Bunzl next week, raising the stakes for management as they prepare to address investors.
Analysts at Stifel described Elliott’s move as “unsurprising” for the “sleep-easy” Bunzl, pointing to a profit warning last year as a clear catalyst for activist attention.
That warning stemmed largely from what Stifel called “self-inflicted execution issues within its North American grocery and foodservice redistribution business, coupled with unusually low levels of M&A in FY25 and a subdued volume outlook.”
North America is Bunzl’s dominant segment, accounting for around 53% of group revenue and generating roughly £6.3 billion of sales in 2025.
While a full disposal of the North American division appears unlikely, Stifel believes a strategic review could result in targeted asset sales or a separation of North America Distribution, the group’s largest operating company.
North America Distribution is also the business most closely associated with the execution failures that triggered last year’s profit warning and subsequent share price decline.
Stifel analyst Charlie Williams expressed reservations about the scale of any proposed buyback, noting the risk of pushing the group’s debt levels beyond its own targets.
“The debate around the use of FCF is interesting, and whilst additional buybacks appear attractive at these levels, we feel inclined to disagree on the quantum of the return given the potential to push leverage above the group’s target range should no divestment take place,” Williams said.
Williams also pointed to the likelihood of a more active acquisition pipeline this year, arguing that capital should be preserved for dealmaking rather than returns alone.
“Additionally, given the subdued M&A spend in 2025, we expect 2026 to be a year of good M&A activity, potentially returning the group more in line with its historical compounder status,” he added.
Bunzl’s shares remain below their pre-profit warning levels despite staging a meaningful recovery this year, leaving investors watching closely for any management response to Elliott’s demands.