This case study explores why activist Investor Nelson Peltz is advocating that PepsiCo should separate its drinks and snacks divisions. It assesses the case for and against division, and considers whether such an event will ever come to realization.
Scope
- Explores PepsiCo's current economic status and the markets it operates in, and how Trian Investments is trying to effect a change.
- Analysis of Trian's white paper for PepsiCo spinoff strategy, and how successful recent spinoffs have been.
- Evaluates PepsiCo's current strategy, and whether it will be sufficient to quell Trian's calls for spinning off the company.
Reasons to buy
How has PepsiCo fared recently, and what is the current state of the North American carbonated beverages market?
Who is Nelson Peltz, what is Trian Investments, and why do they want to spin off PepsiCo?
Is PepsiCo's Power of One strategy working?
Companies mentioned
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Table of Contents
OVERVIEW
Catalyst
Summary
PEPSICO AND NELSON PELTZ
PepsiCo’s recent performance
Nelson Peltz runs Trian Partners
The North American carbonates market is shrinking
PepsiCo’s ...
OVERVIEW
Catalyst
Summary
PEPSICO AND NELSON PELTZ
PepsiCo’s recent performance
Nelson Peltz runs Trian Partners
The North American carbonates market is shrinking
PepsiCo’s mixed fortunes
PepsiCo’s performance against Coca-Cola
PepsiCo’s performance on the stock exchange
Snacks division performs strongly while beverages flounder
Trian advocates spinning off to reinvigorate the company
PepsiCo remains committed to union
Disagreement has prompted a proxy war for control
IS SPINNING OFF PEPSICO THE WAY TO GO?
Trian advocates spinoffs to generate more value
Dr Pepper Snapple: a better investment than the big two?
Benefits for PepsiCo
Divisional split will hone focus
Removing holding company structure will reduce costs
Removing holding company improves accountability
New direction for beverages
Pepsi Max: a metaphor for PepsiCo’s decline?
Opportunity for PepsiCo to innovate
PEPSICO: THE POWER OF ONE?
PepsiCo’s current strategy
PepsiCo is marketing combined pitches to drive cross-divisional sales
The productivity plan seeks to improve financial position
A PepsiCo spinoff could jeopardize lucrative deals
PepsiCo and the NFL
Larger size insulates against changing retail channels
PepsiCo is innovating, despite Peltz’s claims
Product Innovation in the beverage business
PepsiCo is investing in nutrition
Coca-Cola is also launching a Stevia product
Recent financial performance has undermined Peltz’s case
Compensating for declining carbonated soft drinks: smaller packaging
Developing market growth contributes to better results
CONCLUSIONS
Trian in a win-win scenario
APPENDIX
Definitions
Sources
Further Reading
Ask the analyst
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Disclaimer
List of Tables
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List of Figures
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