Update 2:05pm : Updates shares, adds link to Third Point Q3 investor letter.
Colgate-Palmolive ( NYSE: CL ) rose 0.8% after activist investor Third Point took a stake in the consumer products makers.
Third Point is said to have taken a stake of about a $1 billion, according to CNBC's David Faber. Third Point is said to be working with another hedge fund Toms Capital Investment Management.
Third Point's Dan Loeb is advocating that Colgate ( CL ) split off its Hills Pet Food business and believes it could be valued at $20 billion on its own, according to a 3Q investor letter. Colgate has a market cap of $59 billion.
"There's a meaningful hidden value in the company's Hills Pet Nutrition business, which we believe would command a premium multiple if separated from Colgate's consumer assets," Third Point said in the letter, according to Faber.
Colgate ( CL ) has previously suggested that it's not interested in splitting itself up, at least not this point, Faber said.
Colgate ( CL ) didn't immediately return Seeking Alpha email request for comment.
Third Point also pointed out there has been much recent movement in the consumer health sector, including GSK and Pfizer recently separating separating their consumer health division, now called Haleon ( HLN ), which has a large presence in oral care, with brands like Sensodyne, Parodontax, and Polident. In addition, Johnson & Johnson ( JNJ ) plans to separate its consumer health business.
"Such large transactions should cause further consolidation in the space, which could create some interesting opportunities for Colgate’s assets," Third Point's Loeb wrote in the investor letter. "Although the Board is fairly long-tenured and not known for making bold moves, we are confident that it will act in the best interests of shareholders if Colgate becomes part of the current M&A minuet in consumer health."
On Thursday J.P. Morgan upgraded the household products stock to an overweight rating after having it slotted at Neutral.
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Colgate gains after activist Third Point takes stake (update)