Nestlé (NESN) has announced a CHF20bn (£16.3bn) share buyback scheme as part of a new strategy after pressure from an activist shareholder to be more aggressive in its approach to investor returns.

The Swiss food giant said today that, in the context of low interest rates and strong cash flow generation, share buybacks “offer a viable option to create shareholder value”.

As a result of its strategic review the board has approved a share buyback program of up to CHF20bn to completed by the end of June 2020.

The program is scheduled to start on 4 July 2017. The volume of monthly share buybacks will depend on market conditions but is likely to be backloaded in 2019 and 2020 to allow the pursuit of value-creating acquisition opportunities.

It added that should any sizeable acquisitions take place during this period, the share buyback program will be adapted accordingly.

Nestlé said capital spending will be focused on high-growth food and beverage categories such as coffee, petcare, infant nutrition and bottled water, as well as expanding its presence in high-growth geographic markets.

It also pledged to pursue growth opportunities in consumer healthcare, in line with its nutrition, health and wellness strategy.

In terms of M&A, Nestlé said it would have a “disciplined approach to acquisitions”.

“Nestlé will only prioritize external growth opportunities that fit within targeted categories and geographies, deliver attractive returns, and build on the company’s leadership position in fast growing food and beverage categories. “

Early in 2017, the company initiated a review of its capital structure and strategic focus to support and enhance its ability to deliver on its value creation model.

Nestlé’s added that its financial strategy aims at striking the right balance between growth in earnings per share, competitive shareholder returns, flexibility for external growth and access to financial markets.

The announcement comes days after activist investor Third Point bought up a £3.5bn stake in the company and wrote a letter calling Nestlé “ripe for improvement” and “stuck in its old ways”.

Third Point called on the group to boost its margins, buy back shares and divest non-core assets, including its $27bn stake in L’Oreal.

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