PepsiCo: Does Trian have a case for a spinoff?

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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