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UPDATE 3-Investor pressure grows on Danone to overhaul management

* Second investor demands management shake-up

* Danone points to reforms already in train

* CEO Faber has also served as chairman since 2017 (Adds share price, Danone and Bluebell reaction, context on Faber)

PARIS, Feb 11 (Reuters) - France’s Danone came under more pressure on Thursday to make management changes as a second shareholder voiced criticism of weak returns at the food group and demanded it split the roles of chief executive and chairman.

U.S. investment company Artisan Partners, which said it had built up a stake of over 3% in the Activia yoghurt maker, making it the third largest shareholder, criticised the firm’s strategy and share price performance in a letter it made public.

The move follows similar demands from activist investor Bluebell, which has not disclosed its holding but last month called on Danone Chief Executive Emmanuel Faber to step down.

“The roles of chairman and CEO must be separated,” Artisan Partners wrote in the letter, addressed to a Danone independent board member Gilles Schnepp.

Shares in the group, which fell nearly 30% in 2020, were up 3% at 1045 GMT.

The COVID-19 pandemic has complicated prospects for the French company, which makes bottled water such as Evian and suffered as sales to the restaurant sector dwindled during government-enforced lockdowns.

But Bluebell and Artisan have said they believed some problems ran deeper. Artisan said Danone was “truly a star in the industry” but had not invested enough in innovations and areas such as marketing to support its products.

It said the board was not sufficiently independent, despite Faber’s attempts to shake-up management late last year, which included former finance chief Cecile Cabanis switching to a role as vice-executive chairman.

Danone said in a statement on Thursday that it continuously re-evaluated the way the board and executive committee carried out their duties and had already taken steps to refresh its leadership, including by creating a new strategy committee.

“We welcome all investments and value constructive views on how we deliver long-term sustainable value,” Danone said.

URGENT ACTION

Artisan Partners has had holdings in companies including French ones such as catering group Sodexo as a long-term investor, but has occasionally been vocal about demanding changes, including at Swiss engineering group ABB.

On Danone, the group said it was being advised by industry executive Jan Bennink, who once ran Danone’s fresh food products business and other consumer goods groups including Dutch baby food producer Royal Numico.

Bennink has worked with activist funds including Third Point, which called for changes at Danone’s rival Nestle.

Bluebell said in a separate statement on Thursday it was pleased other shareholders wanted corporate governance changes too.

“It is urgent that the board of directors of Danone take decisive actions,” Bluebell said.

Artisan and Bluebell are not operating in a concerted way, one source familiar with the matter said.

Faber has been Danone chief executive since 2014 and took on the chairman’s role as well three years later.

Under his watch Danone bought U.S. organic food producer WhiteWave in a $12.5 billion deal in 2017, bringing the company more into line with healthier eating trends, and Faber has sought to diversify the group’s portfolio in fast-growing areas such as pro-biotics to counter slower growth in dairy.

He recently announced plans to possibly shed some assets, including the group’s business in Argentina, as well as 2,000 job cuts and said Danone would trim back its range of products. (Reporting by Sudip Kar-Gupta, Sarah White and Gwenaelle Barzic. Editing by Jason Neely, Mark Potter and David Evans)

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