Shelly Banjo is a Bloomberg Gadfly columnist covering industrial companies and conglomerates. She previously was a reporter at Quartz and the Wall Street Journal.

Nelson Peltz should be able to help Procter & Gamble clean up its act. 

The activist investor's firm, Trian Fund Management LP, has built a stake of more than $3 billion in The Procter & Gamble Co., the maker of Tide detergent and Gillette razors. From what we can gather so far, Trian hasn't held talks with the company yet, but P&G said it "welcomed the investment." As it should. With open arms. 

P&G's shares have barely budged in the past two years, rising 2 percent compared to an 11 percent gain in the S&P 500. Nevertheless, its shares are priced more richly than those of its peers, at 22 times forward earnings. The average multiple among peers tracked by Bloomberg is around 19. 

Falling Behind
P&G shares have gained in the past year, but lagged the broader market
Source: Bloomberg

As the company has sold off more than 100 brands to focus on 10 core categories, it has seen a fifth of its annual sales disappear since 2012. Market-share losses, a strong dollar, and heftier discounts spurred by competition have made it difficult to pull off efforts to reformulate the 180-year-old company. 

Shrinking To Grow?
P&G has wiped out a decade's worth of revenue gains, mostly by selling big parts of its business
Source: Bloomberg

David Taylor, who took the reins as CEO in November 2015, has had some notable wins. He managed to get rid of brands such as Covergirl and Duracell that had been distracting P&G from its better-performing businesses. He followed the rest of the consumer packaged-goods industry in slashing costs, priming P&G for a more profitable future. But he hasn't been able to push the company far enough, fast enough. 

Peltz should be able to help. He's a natural deal-maker, and P&G is long overdue for an acquisition or two (or five) that could help jump-start its growth. 

P&G hasn't bought a company since 2012. Its last big bet was in 2005, when its $57 billion acquisition of Gillette secured 60 percent of the razor market. It's worth noting that Unilever was able to scoop up 15 percent of the same market for just $1 billion last year with its purchase of Dollar Shave Club.  

Missing Out?
P&G's last mega-deal is more than a decade old: its $57 billion purchase of Gillette
Source: Bloomberg

P&G has sidelined itself while the rest of its industry consolidates. And P&G has mostly sat idle as startups and others have "un-bundled" the corporate giant -- tech jargon for what happens when dozens of smaller competitors start eating into an established company's business by picking off bits of its portfolio, piece by piece.

Besides razors, companies that make everything from diapers to detergent have been stealing market share away from P&G. 2016 marked a deal high for startups in the consumer products goods industry, according to data and analytics company CB Insights.

Meanwhile, P&G cut its spending on research and development by $100 million last year -- the first time since 2010 its annual R&D spending was less than $2 billion.

Instead of allocating more money to developing new products or buying upstart competitors, P&G has instead plunged more funds into buying back its own shares. That might have helped boost its stock in the short term, but it's not going to help it attract more customers. 

Cash Plunge
P&G has put its excess cash into share buybacks
source: Bloomberg

Peltz might also push P&G to split itself in two, separating its household-products business from its personal-care business, much as Energizer did with its personal-care business.

Alliance Bernstein, which has been advocating a breakup for years, reckons P&G doesn't get enough benefit from the sheer scale of its operations. A substantial breakup would result in bigger returns compared to the smaller divestitures P&G has made so far, according to Bernstein, which has pegged the upside of a breakup at around 13 percent. 

P&G CFO Jon Moeller is expected to speak at the Consumer Analysts Group of New York meeting next week. Investors expect to hear how he plans to respond to news of Peltz's investment. Even addressing how P&G might cooperate with the activist investor might just be enough to help turn the tide in its favor. 

Update:  An earlier version of this story incorrectly said P&G's CEO David Taylor would be speaking at the Consumer Analysts Group of New York meeting. P&G CFO Jon Moeller will bethe one speaking at the meeting.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Shelly Banjo in New York at

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Mark Gongloff at