Activist Investor Elliott Builds $4 Billion Stake in PepsiCo
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Activist investor Elliott Investment Management has built a stake of about $4 billion in PepsiCo Inc., with plans to call for changes at the struggling beverage maker.
The position makes it one of PepsiCo’s largest investors, the to the company board of directors. PepsiCo said will review Elliott’s perspectives in the context of its growth strategy, which it said is positioned to accelerate growth and deliver long-term value for shareholders.
The soda-and-snacks maker has struggled in the face of competitive pressure and changing consumer tastes, with its market value plunging more than 20% from a peak in May 2023. In a, Elliott outlined its plans for PepsiCo, which include potentially restructuring its beverage unit and reviewing its snacks offerings.
The company ranks No. 2 on the Transport Topics Top 100 list of the largest private carriers in North America. Its shares rose in the first hours of trading on Sept. 2.
“PepsiCo maintains an active and productive dialogue with our shareholders and values constructive input on delivering long-term shareholder value,” the company said in a statement.
The company’s beverage segment, including its namesake soda brand as well as Gatorade and Mountain Dew, has persistently lost market share and has underperformed for “more than a decade,” Elliott said.
It proposed looking into re-franchising the beverage unit’s “operationally intensive” bottling network, as Coca-Cola Co. has done, so it can focus on its core strengths.
Coca-Cola’s bottling partners are independent companies that purchase the soda maker’s brands and syrups to bottle and distribute. The design allows Coca-Cola to focus on creating and building brands, while leaving the capital-intensive bottling business to outside operators, many of them publicly traded companies.
PepsiCo utilizes a network of independent bottlers, but also operates many company-owned bottling businesses, which some investors now would like to see the company shed.
Food Business
While the company’s soda struggles were offset for years by its snacks brands like Lay’s and Doritos, its food segment hit hard times more recently, the activist said. The food segment has seen annual sales falter since 2023, as inflation-strapped shoppers focus on nutrition and value.
Elliott said PepsiCo should review and streamline its snacks portfolio and divest underperforming assets.
It said its goal was to work with the soda-and-snack giant’s board and management on its goals, which also include investing in marketing its core brands. It also called on leadership to communicate a clear plan and provide new targets.
Elliott’s stake was previously reported by the Wall Street Journal.
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