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(Bloomberg) — Elliott Investment Management LP has taken an almost 5% stake in Bunzl Plc, people familiar with the matter said, after a profit warning last year sent the UK distributor’s shares tumbling.

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The activist investor is calling on London-based Bunzl to repurchase shares equivalent to as much as 10% of its total market capitalization over the next 12 months, the people said, asking not to be identified discussing confidential information.

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Bunzl shares rose as much as 3.7% on Monday. The stock was up 1.4% at 9:45 a.m. in London, giving the company a market value of around £8.3 billion ($11.2 billion).

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Elliott is also urging Bunzl to conduct a strategic review with a focus on its North American business, its largest market, according to the people. A review could lead to takeover interest from private equity suitors, they said. In recent months British product-testing provider Intertek Group Plc and energy company DCC Plc have become targets for buyout firms after taking steps to simplify their portfolios.

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“Bunzl is committed to engagement with all shareholders and is focused on creating shareholder value,” a Bunzl spokesperson said.

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A representative for Elliott declined to comment. 

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A more than three-decade streak of continual dividend growth helped the under-the-radar FTSE 100 constituent build a base of mostly long-term oriented investors. But a sudden profit warning last year aggravated a descent in the stock.

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Elliott wants Bunzl to deploy more of its free cash flow to step-up repurchases, after a recent slowdown in dealmaking as well as buybacks despite the slide in share prices, the people said. Bunzl bought back £200 million of its own shares through 2025, after repurchasing about £250 million in late 2024.

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Bunzl’s pace of acquisitions has also slowed, with the company completing eight transactions in 2025, down from 15 the previous year, according to its annual reports.

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The company’s North American business was behind last year’s profit warning, which it attributed to operational challenges. Bunzl has since announced leadership changes at the unit to improve performance.  

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Elliott believes separating the business, which operates independently and shares few synergies with the rest of the company, could help lift Bunzl’s valuation to a level more comparable with its competitors, which trade about 40% to 50% higher on a forward price-to-earnings basis, the people said. 

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The distribution market in North America has attracted private equity interest from the likes of Advent, Bain Capital, Clayton Dubilier & Rice and Warburg Pincus.

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Elliott has ramped up its activism in the UK, building large positions in marquee British firms such as London Stock Exchange Group Plc and BP Plc in recent years.

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(Updates shares, adds detail on strategic review, Bunzl response from third paragraph.)

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