Dan Loeb has amassed a $3.5 billion stake in Nestle SA, targeting Europe’s largest company in the biggest bet of his two-decade career as an activist investor.

Third Point, Loeb’s hedge fund, owns about 40 million shares in the Vevey, Switzerland-based company, according to an investor letter released Sunday after Bloomberg first reported the position. The fund encouraged Nestle to sell its stake in cosmetics maker L’Oreal SA, increase leverage for share buybacks and adopt a formal profitability target, among other suggestions. The shares rose as much as 4.8 percent in Zurich, the biggest intraday advance since January 2015.

“It is rare to find a business of Nestle’s quality with so many avenues for improvement,” wrote Third Point, which holds a 1.3 percent stake.

The Nestle position adds to a recent push into Europe for Loeb, who’s better known for his campaigns in the U.S. and Japan. Third Point, citing an improved economic outlook and declining political risks in the region, has invested in UniCredit SpA, the second-largest listed bank in Italy, and German utility EON SE.

Loeb’s investment in Nestle ratchets up pressure on the European consumer-goods industry after rival Unilever rebuffed an unwanted takeover approach from Kraft Heinz Co. earlier this year. The Anglo-Dutch company, while contrasting its long-term approach with what it described as a push for short-term profits by the U.S. company, responded by promising to boost shareholder returns and put its slow-moving spreads business up for sale. Reckitt Benckiser Group Plc has moved to sell its food business after acquiring baby-formula maker Mead Johnson, while Danone SA is selling the Stonyfield yogurt business after acquiring soy milk maker WhiteWave.

The Third Point investment also puts a spotlight on Nestle’s new chief executive officer Mark Schneider, after 2016 sales growth fell to the slowest pace in at least a decade and the stock price lagged behind other consumer giants in recent years. For Loeb, Nestle represents not only his single largest investment since Third Point was founded in 1995, but also the biggest company he’s ever targeted to improve shareholder returns. Its market capitalization of $263 billion as of last week is the largest in Europe.

“We are convinced that Mark Schneider has very ambitious plans for Nestle, including some or all of Third Point’s proposals,” Jean-Philippe Bertschy, an analyst at Bank Vontobel AG, wrote in a note. “Third Point’s move might be seen as hostile to Nestle, but could well be a great ally and accelerator for Mark Schneider in his strategic plan.”

Schneider, the first Nestle outsider to run the world’s biggest food producer in nearly a century, has already started shifting the company’s priorities toward healthier foods and faster-growing businesses since taking the helm on Jan. 1. Nestle said this month it may sell its U.S. chocolate and candy unit, which includes brands such as Butterfinger and Baby Ruth.

“As always, we keep an open dialogue with all of our shareholders and we remain committed to executing our strategy and creating long-term shareholder value,” Nestle said in an emailed comment Monday.

While Third Point applauded Nestle’s plans for the confectionery business and called Schneider a high-caliber executive with an impressive track record, the hedge fund urged him to articulate a “bold” action plan that addresses Nestle’s “staid culture and tendency towards incrementalism.”

“Ultimately, they have been very slow to respond to changes in the market,” James Santo, a senior vice president at asset manager Northern Trust Corp. in Sydney, said by phone on Monday. “That’s clearly why we’re seeing the pressure coming from the shareholders now.”

Nestle, which makes everything from Nespresso coffee to Gerber baby food, should conduct a review of its more than 2,000 brands and reduce exposure to underperformers, Third Point said. The company should adopt a formal target of boosting its operating profit-margin to as much as 20 percent by 2020, from about 15 percent in 2016, and double its leverage ratio to free up more cash for stock buybacks, the hedge fund said.

The time is also right for Nestle to sell its L’Oreal position, Third Point said. Nestle owns about 23.2 percent of the cosmetics giant, a stake valued at about $27 billion, according to data compiled by Bloomberg. L’Oreal rose as much as 4.8 percent in Paris trading.

Activist Revival

“The L’Oreal stake could be divested via an exchange offer for Nestle shares that would accelerate efforts to optimize its capital return policies, immediately enhance the company’s return on equity, and meaningfully increase its share value in the long run,” said Third Point, which retained former Sara Lee Corp. Executive Chairman Jan Bennink to advise on the investment.

A L’Oreal spokeswoman declined to comment.

Consumer companies have become popular targets for activist shareholders. In 2015, billionaire hedge fund manager Bill Ackman amassed a $5.6 billion stake in snack giant Mondelez International Inc. and called for management to improve the company’s performance, leading to cost cuts. Procter & Gamble Co. attracted Nelson Peltz’s Trian Fund Management LP, which revealed its position in the consumer-products maker in February and has since amassed a stake valued at about $3.3 billion, according to its latest regulatory filing.

Loeb is aiming high with Nestle as activist investors enjoy a resurgence of client inflows and returns. Third Point’s flagship fund gained almost 10 percent in the first five months of 2017, part of an industrywide rebound that saw event-driven funds return 5.6 percent on an asset-weighted basis, the most among the main strategies tracked by Hedge Fund Research Inc.

Still, not everyone’s convinced Nestle needs drastic changes to secure its future.

“Anything is possible, but I’m not am not totally convinced that Dan Loeb has a better strategic vision for the company than its own management,” Stephen Macklow-Smith, head of European equity strategy at JPMorgan Asset Management in London, told Bloomberg TV. “Given its very, very powerful portfolio, particularly in areas like Nespresso, it’s pretty well placed for the future.”