WHEN: MONDAY, DECEMBER 5
WHERE: CNBC'S "SQUAWK ON THE STREET"
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Trian Fund Management's Nelson Peltz from the No Labels conference in Washington, DC. The interview aired on CNBC's "Squawk on the Street" today. Following is a link to video of the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000573487.
All references must be sourced to CNBC.
FABER: WELCOME BACK TO "SQUAWK ON THE STREET." I'M DAVID FABER AT THE NO LABELS CONFERENCE -- YEAH, HERE WE ARE. IN WASHINGTON, D.C. AND JOINED NOW BY SPECIAL GUEST NELSON PELTZ, OF COURSE THE CHAIRMAN AND CEO OF TRIAN. AND A BIG PARTICIPANT IN NO LABELS AS WELL.
PELTZ: THAT'S CORRECT. AND WE'RE RIGHT IN THE MIDDLE OF IT. WE GOT A BIG TURNOUT, DAVID. AND LET ME TELL YOU WHAT NO LABELS IS. IT'S OUR WATCH WORD IS BIPARTISANSHIP. THIS ORGANIZATION STARTED ABOUT FIVE OR SIX YEARS AGO BECAUSE OF ALL OF THE DYSFUNCTION THAT WAS IN WASHINGTON. AND I THINK WHAT WE'RE – OUR GOAL IS TO BRING PEOPLE, REACH ACROSS THE AISLE, THERE HAS BEEN NO PENALTY IN THE BALLOT BOX FOR OBSTRUCTIONISTS, AND THERE'S BEEN NO REWARD FOR PROBLEM SOLVERS FOR PEOPLE CROSSING THE AISLE.
FABER: PARTICULARLY IN CONGRESSIONAL RACES.
PELTZ: THAT'S CORRECT.
FABER: WHERE A LOT OF THE DISTRICTS ARE GERRYMANDERED, I KNOW YOU GUYS –
PELTZ: WE HAVE A SOLUTION. AS YOU KNOW THERE'S CAPITAL ON THE LEFT, THERE'S CAPITAL ON THE RIGHT, WE ARE NOW CREATING CAPITAL IN THE MIDDLE. WE HAVE A SUPER PAC WE'RE RAISING TODAY $50 MILLION DISCREET FOR PRIMARIES ONLY. AMERICA'S BEEN GERRYMANDERED AROUND, SO WE'RE NOT GOING TO CHANGE PARTIES, BUT WE ARE GOING TO GET THOSE PEOPLE OUT OF THE SYSTEM -- WANT TO SOLVE ANYTHING.
FABER: YOU'RE GOING TO RAISE $50 MILLION FOR THE 2018 RACES.
PELTZ: EXACTLY.
FABER: YOU'RE GOING TO BASICALLY SUPPORT THOSE WHO ARE RUNNING EITHER AGAINST A FAR RIGHT CANDIDATE OR, I GUESS, FAR LEFT.
PELTZ: OR A FIREBRAND ON THE LEFT. EXACTLY RIGHT. WE TRIED THIS SUMMER WITH TWO RACES. HIGHLY SUCCESSFUL. BOTH GUYS WERE LOSERS, THEY WERE DOUBLE DIGITS DOWN. WE PUT OUR MONEY IN AND HAD OUR TECHNOLOGY, WE GOT 13,000 VOTES TO 30,000 VOTES. AND THE PEOPLE WHO VOTE IN THE PRIMARY ARE THE REAL ENTHUSIASTS, THE REAL HARD CORE. AND THEY'RE EFFECTING HUNDREDS OF THOUSANDS OF PEOPLE. SO WHAT WE DID IS WE GOT A BIGGER TURNOUT, AND WE GOT OUR DOUBLE DIGIT DOWN GUYS TO KNOCK OUT AN EXTREME RIGHT GUY IN KANSAS. HE WAS AN INCUMBENT AND WE GOT RID OF TWO INCUMBENT-LIKE CANDIDATES IN FLORIDA WHO WERE EXTREME LEFT. AND BOTH THESE PEOPLE COULDN'T EVEN HAVE BEEN ELECTED, THEY'RE HERE, AND THEY'RE NOW PROBLEM SOLVERS AND THEY'RE NOT OBSTRUCTIONISTS.
FABER: WELL I WANT TO TALK MORE ABOUT POLITICS AND GOVERNMENT OF COURSE GIVEN THE INCOMING ADMINISTRATION, YOU'VE KNOWN DONALD TRUMP AND HAVE FOR YEARS, AND I KNOW YOU'VE SPOKEN TO HIM SINCE HE WAS ELECTED.
PELTZ: QUITE OFTEN.
FABER: HE TWEETED YESTERDAY QUITE A BIT ABOUT TRADE AND CHINA IN PARTICULAR. OF COURSE YOU HAVE THE CALL WITH THE PRESIDENT OF TAIWAN A FEW DAYS AGO THAT SEEMED TO RAISE SOME CONCERNS. WHAT ARE YOUR EXPECTATIONS, PARTICULARLY AS AN INVESTOR IN MULTINATIONALS LIKE A MONDELEZ, FOR WHAT THE TRUMP ADMINISTRATION IS GOING TO MEAN
FOR COMPANIES THAT CONDUCT BUSINESS ALL OVER THE WORLD AND ALSO HERE IN THE STATES?
PELTZ: YOU KNOW, PEOPLE ARE CONFUSED. THERE'S A DIFFERENCE BETWEEN A GLOBAL COMPANY AND A COMPANY THAT'S OUTSOURCING. MONDELEZ IS AS YOU KNOW HAS BEEN CRITICIZED OCCASIONALLY.
FABER: YEAH, HE CAME AFTER THEM FOR THEIR OREO MANUFACTURING.
PETLZ: HE STOPPED HE LOVES OREOS AGAIN, I THINK. AND I EXPLAINED TO HIM THAT WE HAVE A DOZEN PLANTS ACROSS AMERICA TODAY MAKING OREOS. WE HAVE ONE PLANT THAT'S BEEN OPEN FOR ABOUT TWO YEARS IN MEXICO MAKING OREOS FOR MEXICO AND FOR THE UNITED STATES. IF YOU LOOK AT MONDELEZ, 75% OF OUR SALES ARE DONE OUTSIDE OF AMERICA. OKAY. THERE'S NO WAY THAT WE'RE NOT GOING TO HAVE PEOPLE EMPLOYED OUTSIDE AMERICA. HOWEVER, I THINK THAT HIS TAX PLAN IF HE GETS THE KIND OF TAX REDUCTIONS HE'S TALKING ABOUT, WE WILL WIND UP HAVING MORE EMPLOYMENT, MORE COMPANIES COMING BACK TO THE UNITED STATES WHETHER THEY HAVE GONE TO IRELAND OR THEY'RE STILL AMERICA AND THEY'VE GOT THEIR TAX SHELTERS IN SWITZERLAND OR HOLLAND OR SOMEWHERE ELSE.
FABER: BUT THIS IDEA OF PLACING A 35% TARIFF ON MANUFACTURING THAT MOVES ABROAD THAT THEN WANTS TO SEND -- DO YOU THINK, A, THAT'S WORKABLE? AND IS IT A CONCERN TO YOU?
PELTZ: WELL, THAT'S MORE OUTSOURCING. AND THAT'S CERTAINLY GOING TO STOP CEOs WHO ARE THINKING ABOUT DOING IT GIVE THEM PAUSE. AND I THINK THAT'S NOT A BAD IDEA.
FABER: YOU'RE A FREE MARKET GUY THOUGH, THAT'S NOT PARTICULARLY FREE MARKET, IS IT?
PELTZ: I AM A FREE MARKET GUY, BUT I THINK THE SCALES HAVE BEEN SHIFTED TOO MUCH. I REALLY DO. I AM A FREE MARKET GUY. I BELIEVE IN GLOBALIZATION. I DON'T BELIEVE IN TARIFFS FOR TARIFFS SAKE.
FABER: YOU ALSO BELIEVE IN COST CUTTING. I MEAN, ONE OF THE KEYS TO THE SUCCESS YOU'VE HAD AT TRIAN.
PELTZ: THAT'S CORRECT.
FABER: IN YOUR INVESTMENTS IS GOING INTO COMPANIES AND SAYING, WAIT A SECOND, YOU'RE WAY TOO FAT. THAT TYPICALLY DOES RESULT IN JOB LOSSES.
PELTZ: IT DOES. THOSE JOBS SHOULD NEVER HAVE BEEN PUT ON IN THE BEGINNING. THEY SHOULD NEVER HAVE BEEN THERE. OKAY. THERE'S A SUFFOCATING BUREAUCRACY THAT HAS CREATED MANY LARGE COMPANIES, AND DON'T FORGET HERETOFORE THE BIG COMPANIES WERE UNASSAILABLE. PRIVATE EQUITY WASN'T GETTING INVOLVED WITH GE OR KRAFT OR MONDELEZ. THEY WERE NOT. SO THEY WERE LEFT TO THEIR OWN DEVICES, BANK OF NEW YORK, ET CETERA. THOSE COMPANIES ARE HEALING THEMSELVES TODAY AND MARGINS WE'RE THRILLED. I MEAN, MONDELEZ'S MARGINS WHEN I GOT ON THE BOARD WE WERE COMING OFF AN 11% YEAR IN '13. AND NOW THEY'RE 15 TO 16.
FABER: RIGHT.
PELTZ: AND IRENE ROSEN FELD HAS DONE AMAZING WORK.
FABER : SHE'S CUT A LOT OF COSTS. OF COURSE YOU'RE A BOARD MEMBER AT MONDELEZ. I WONDER IF YOU BELIEVE IN THE FREE MARKET AND YOU AS AN INVESTOR WANT TO SEE THE COMPANIES DO WHAT'S BEST FOR SHAREHOLDERS, WHICH TYPICALLY MEANS GETTING MARGINS UP. IF STAYING IN THE U.S. IS NOT THE RIGHT THING FOR SHAREHOLDERS OR YOUR COST OF GOODS IS GOING TO BE HIGHER AS A RESULT OF STAYING IN THE U.S., DON'T YOU WANT THEM TO MOVE?
PELTZ: YEAH, BUT DAVID, A LOT OF THOSE JOBS THAT WERE CUT WERE NOT IN AMERICA. THERE WERE LOTS OF JOBS CUT ALL THROUGH EUROPE, THROUGH ASIA. I MEAN, WE WERE FAT. AND THEY NEEDED TO BE CUT. AND THANKFULLY THEY'RE GONE. AND I THINK AS A RESULT WE WILL GROW FASTER AND WE WILL HIRE THE RIGHT KIND OF PEOPLE, PRODUCTIVE PEOPLE. THEY'RE GOING TO HELP THE COMPANY MOVE FORWARD. WHEN YOU CUT, YOU BETTER BE GROWING.
FABER: RIGHT.
PELTZ: IT'S NOT JUST CUTTING FOR CUTTING. IT'S CUTTING TO GET GROWTH AND HAVE THE ABILITY TO HIRE MORE PEOPLE.
FABER: NO, I UNDERSTAND THAT. AND THERE CAN BE A TIME WHEN THERE'S TOO MUCH CUTTING.
PELTZ: THAT'S CORRECT.
FABER: SOME PEOPLE SAY HEINZ, WHERE YOU ONCE OF COURSE WAGED A PROXY FIGHT AND HAD BOARD SEATS, HAS CUT TOO MUCH.
PELTZ: SOME COULD SAY THAT, YEAH.
FABER: DO YOU AGREE?
PELTZ: WELL, LOOK, WHEN I WAS AT HEINZ AND BILL JOHNSON WAS RUNNING HEINZ, WE HAD 32 STRAIGHT QUARTERS OF ORGANIC SALES INCREASES. THERE ISN'T A CONSUMER COMPANY ON THE PLANET WHO COULD MAKE THAT CLAIM FOR THAT EIGHT-YEAR PERIOD. THEY'RE NOT ENJOYING THAT NOW AT HEINZ. ON THE OTHER HAND, EBITDA IS GROWING DRAMATICALLY. AND LOOK, YOU'VE GOT TO CUT FAT. YOU HAVE TO KNOW WHEN YOU HIT MUSCLE AND YOU BETTER NOT BE HITTING BONE. THOSE ARE FINE LINES.
FABER: THEY'RE VERY FINE LINES. I WONDER, WE'RE MENTIONING OF COURSE HEINZ, KRAFT HEINZ, WHICH IS CONTROLLED BY 3G AND WARREN BUFFETT A BIG INVESTOR THERE, BUT DO FOREIGN COMPANIES, YOU THINK, FACE A TOUGHER TIME NOW UNDER A TRUMP ADMINISTRATION FOR DOING DEALS AND FOR EXAMPLE BUYING U.S. COMPANIES AND CUTTING COSTS DRAMATIICILY?
PELTZ: WELL, I'LL TELL YOU, FOREIGN COMPANIES HAVE ISSUES ALL THAT ASIDE BECAUSE IF YOU'RE A COMPANY IN FRANCE AND YOU WANT TO LAY PEOPLE OFF, YOU GOT A REALLY HARD JOB IN DOING THAT. THE GOVERNMENT IS GOING TO MAKE LIFE SO DIFFICULT FOR YOU TO LET PEOPLE GO. THEY HAVE A GREAT DEAL OF DIFFICULTY. I THINK IT'S GOING TO BE – I DON'T KNOW WHEN THE TRUMP ADMINISTRATION TALKS ABOUT FOREIGNERS BUYING U.S. COMPANIES AND THEN WE STILL HAVE CAPITALISM. I THINK THE TRUMP RALLY IS CELEBRATING THAT CAPITALISM IS BACK.
FABER: RIGHT. LESS REGULATION. OF COURSE YOU MENTIONED TAX REFORM IS CERTAIN.
PELTZ: TAX REFORM, INFRASTRUCTURE, DEREGULATION. I MEAN, WHEN I WAS A KID GROWING UP, YOU KNOW, MY FATHER TOLD ME WE HAD THE GROWINGEST MIDDLE CLASS IN THE WORLD. AND HE WAS RIGHT. AND THE MIDDLE CLASS WAS COMPOSED OF THE PLUMBING SUPPLY HOUSE AND THE PAINTING CONTRACTOR.
FAVER: YEAH, BUT WE DIDN'T HAVE A GLOBAL MARKET LIKE WE DO NOW. AND YOU HAVE BEEN A HUGE BENEFICIARY OF GLOBALIZATION.
PELTZ: I AGREE. BUT THOSE GUYS HAVE BEEN REGULATED OUT OF BUSINESS. AND THERE'S STILL A GUY IF YOU HAVE YOUR PLUMBING CONTRACTOR AND THE PAINT SUPPLY HOUSE, YOU NEED THOSE GUYS. AND THEY CAN'T BE SUFFOCATED WITH REGULATION, DAVID. THAT'S THE PROBLEM. THIS REGULATION IS SO EXPENSIVE FOR A SMALL COMPANY. AND IT'S SUFFOCATING THEM. SO WE'RE HIRING MORE LAWYERS, AND THESE SMALLER COMPANIES CAN'T HAVE THEIR IN-HOUSE LAWYERS.
FABER: RIGHT. WE MENTIONED MONDELEZ A COUPLE OF TIMES, OF COURSE THE IDEA OF THE MULTINATIONAL WITH 75% OF ITS SALES OVERSEAS, A LOT OF TALK THOUGH AS WELL THAT KRAFT HEINZ, WHICH WE ALSO MENTIONED, AND MONDELEZ, SHOULD GET TOGETHER. RECREATING WHAT WAS THE ORIGINAL KRAFT, WHICH YOU KNEW WELL. DO YOU THINK THAT DEAL MAKES SENSE?
PELTZ: LOOK, I'M ON THE BOARD OF MONDELEZ. I HEAR THE RUMORS THAT YOU HEAR. I KNOW NOTHING MORE ABOUT IT THAN THAT. I THINK MONDELEZ IS DOING A GREAT JOB ON THEIR OWN. THEY'VE GOTTEN MARGINS FROM 11 TO NOW GOING TO 17, 18 BY '18. THAT'S A 50% INCREASE IN MARGIN. LOOK, THEY'RE DOING A GREAT JOB. IF SOMEONE WANTS TO COME IN AND MAKE AN OFFER FOR THE COMPANY, I CAN'T STOP THEM. THAT'S LIFE. IT BETTER BE FAIR. IT BETTER BE RIGHT. AND WE'LL TAKE THEM ON AS A BOARD.
FABER: RIGHT. WELL, OTHER COMPANIES OF COURSE THAT YOU ALSO HAVE HAD CONTINUED INVESTMENTS ON ARE DuPONT, WHICH IS IN THE MIDST OF THIS DEAL TO MERGE WITH DOW.
PELTZ: RIGHT.
FABER: A LOT OF DOUBTS TO A CERTAIN EXTENT ON THE REGULATORY FRONT. NOT JUST HERE BUT IN THE EU AS WELL. ARE YOU STILL CONFIDENT THAT DEAL'S GOING TO BE APPROVED?
PELTZ: LOOK, I'M POSITIVE ABOUT IT. I'M POSITIVE THAT IT'S GOING TO CLOSE. THE EU HAS THREE CHEMICAL DEALSIN FRONT OF THEM RIGHT NOW. THEY'VE GOT THE BAYER/MONSANTO, CHEM CHINA CYGENTA AND THEY'VE GOT OURS I THINK THEY ARE GOING TO BE IN A ROUGH PLACE TO SAY NO THIS ONE AND YES TO THIS ONE -- I THINK IT'S GOING TO BE YES OR NO TO ALL THREE AND FRANKLY WE'RE GOING TO HAVE A SIMILAR KIND OF ISSUE, OUR JUSTICE DEPARTMENT HERE IS GOINGTO HAVE THE SAME KIND OF PROBLEM TO SAY YES AND NO TO EITHER ONE OF THEM. BUT DuPONT ON ITS OWN WHETHER THE DEAL IS APPROVED AND I DO THINK IT WILL BE, IS DOING A PHENOMENAL JOB. ED BREEN HAS BEEN A BREATH OF FRESH AIR. THEY HAVE TAKEN ABOUT A BILLION OF COSTS OUT OF THE SYSTEM ALREADY. THIS IS NO MERGER, NO COMBINATION, JUST SINGING FROM THE SAME SONG BOOK WE SING.
FABER: RIGHT. YOUR WHITE PAPER OF COURSE WAS PART OF THAT. NELSON, I FELT LIKE WE TALKED ABOUT TRIAN BUT POSITIONS YOU'VE HAD FOR A LONG TIME, BY THE WAY YOU HOLD THEM FOR A LONG TIME. I KNOW THAT. BUT I HAVEN'T HEARD ANYTHING NEW IN A WHILE. BUT I HAVE HEARD SOMETHING'S COMING.
PELTZ: YOU KNOW WHAT'S NICE? WE'VE HAD A WONDERFUL YEAR THIS YEAR.
FABER: YOU GUYS HAVE HAD A GOOD YEAR PERFORMANCE WISE?
PELTZ: WELL, I'M NOT ALLOWED TO TALK ABOUT PERFORMANCE, BUT THE COMPANY'S HAD EARNINGS GO UP VERY NICELY. AND WE'VE DONE THAT. AND WE DON'T HAVE A NEW POSITION. BUT WE DO HAVE A NEW POSITION, DAVID. WE'VE STARTED BUYING ABOUT TWO WEEKS AGO. WE OF COURSE CAN'T ANNOUNCE IT NOW, WE BOUGHT QUITE A BIT OF STOCK AND WE'VE GOT QUITE A BIT MORE TO BUY. AND I HOPE THAT WE WILL BE ABLE TO TALK IN CONFIDENCE WITH MANAGEMENT AND THE BOARD BEFORE IT COMES TO YOU AND THE PRESS.
FABER: I'LL TRY NOT TO MAKE THAT HAPPEN, OF COURSE, AS YOU KNOW.
PELTZ: I KNOW YOU WILL.
FABER: SIMILAR TO THE KIND OF STAKE YOU TOOK IN GE, SORT OF WHERE YOU'VE FORGED THIS NEW AREA WHERE YOUR REPUTATION, YOU LIKE TO THINK, IS SOMETHING COMPANIES WANT TO EMBRACE. SO HAVING YOU AMONGST SHAREHOLDERS IS A BENEFIT. YOU GOING ALONG THOSE LINELINES?
PELTZ: WE HAVEN'T APPROACHED THE COMPANY YET, BUT WE APPROACHED THEM PEACEFULLY. WE APPROACHED THEM WITH A THOUGHTFUL PLAN. AND WE THINK THAT THEY CAN IMPROVE WHAT THEY'RE DOING TODAY BY ADAPTING OUR PLAN. HOPEFULLY THEY'LL BE LIKE MINDED. AND WE'LL SEE. WE LIKE TO BE THE FIRST ONE TO GO TO THEM AS OPPOSED TO YOU, BUT YOU'VE GOT TO DO YOUR JOB AND I'VE GOT TO DO MINE.
FABER: RIGHT. PERHAPS YOU AND I WILL SIT DOWN FOR ANOTHER INTERVIEW ABOUT THAT INVESTMENT AT SOME TIME.
PELTZ: I LOOK FORWARD TO IT.
FABER: AS DO I. NELSON, THANK YOU VERY MUCH FOR TODAY. APPRECIATE IT.
PELTZ: THANK YOU VERY MUCH FOR HAVING ME.
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