The dispute between food and beverage giant,
) and its majority stake holder, Nelson Peltz to split the
former's beverage and snacks businesses seems to be going on
In mid February, Peltz, renewed his campaign to push Pepsi to
separate its underperforming beverage business from the stronger
snacks business. Per media sources, Peltz in a 37-page letter to
Pepsi's board, urged that the two businesses be separated to
enable the company to concentrate on snacks, thereby accelerating
its sales and profits. He argued that a split would "create two
leaner and more entrepreneurial companies". Peltz also warned
about taking the case directly to shareholders.
However, Pepsi's board once again rejected Peltz's proposal to
split the company, as per media reports. Last week, in a letter
to the activist investor, Ian Cook, presiding director of Pepsi's
board, told that the two businesses were better together and
splitting the two would erode instead or creating shareholder
Cook's letter supports the stance taken by Pepsi chief, Indra
Nooyi at the fourth quarter conference call in mid February.
During the call, Nooyi announced that retaining the American
beverage business would be in the best interests of the company.
As per media sources, Peltz was highly disappointed with Nooyi's
decision, instigating him to send the 37-page letter.
Peltz's investment company, Trian Fund Management, holds major
stake in Pepsi. Shifting consumer preferences toward health and
wellness and "good-for-you" products is lowering the demand for
high-calorie soft drinks, especially in North America. Thus,
beverage giants like Pepsi and
The Coca-Cola Company
) are witnessing declining sales of carbonated beverages,
especially the colas. Peltz feels Pepsi's underperforming
beverage business is overshadowing its fast growing snack
Peltz has been pressuring Nooyi for months to split the two
businesses. Earlier, Peltz had pushed Pepsi to buy global snacks
Mondelez International, Inc.
). However, he put off this agenda after joining the former's
board in January this year. Trian Fund Management also holds
major stake in Mondelez.
Previously known as Kraft Foods, Inc., Mondelez changed the
name following the spin-off of its North American grocery
business into a separate independent company,
Kraft Foods Group, Inc.
) in Oct 2012.
Currently, Pepsi carries a Zacks Rank #3 (Hold).
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