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 Peltz's Trian Fund Management, which owns nearly 1 percent of
PepsiCo's stock, has been urging the company to split its
flourishing snacks division from its sluggish beverage business to
create "two leaner and more entrepreneurial companies."
Peltz, in a letter to PepsiCo's board on Thursday, demanded the
company give details about its expenses and provide volume growth
and market share data for all its beverage categories in North
America.
He also called for a meeting of shareholders and board members
without the presence of PepsiCo's management.
In an email response to Peltz's latest letter, PepsiCo said two of
its board members had already met with Trian without management
present. "The board has thoroughly reviewed Trian's proposals and
has concluded that they would not maximize shareholder value,"
PepsiCo said.
The company, known for beverages like Pepsi, Tropicana and Gatorade,
also sells snacks such as Lays, Cheetos and Doritos chips, among
others.
PepsiCo, like rival Coca-Cola Co <KO.N>, has been battling declining
soda sales in developed markets, especially the United States, as
health-conscious consumers switch to non-carbonated beverages such
as juices and health drinks.
Peltz, in his latest letter, also asked PepsiCo to outline plans for
its bottling operations, which have been a drag on the company's
performance.
"Last fall, management told us that the acquisitions were 'a
mistake' and the bottling system was 'in disarray' when the bottlers
were acquired, yet we believe the system is operating far less
efficiently today," Peltz wrote.
He asked PepsiCo to explain why it believed spending $240 million on
renovating its headquarters was better than investing in raising its
bottling capacity and launching more package sizes to compete better
with Coca-Cola.
" ... In a recent phone conversation, CEO Indra Nooyi acknowledged
that PepsiCo is indeed behind Coke in alternative package sizes but
argued that catching up would require significant capital
investment," Peltz wrote.
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He urged the company to cut costs by reducing the number of its
headquarters to two from four and invest the savings in price,
marketing, innovation and packaging.
Peltz criticized PepsiCo Presiding Director Ian Cook's response to
his earlier letter sent in February.
"The dismissive tone of his letter suggests that you do not
appreciate the degree to which PepsiCo's shareholders are
frustrated," Peltz wrote on Thursday.
Cook, in his response late in February, reiterated PepsiCo's stance
that its board and management were "comfortable" and in "complete
alignment" on rejecting Peltz's demands.
The company has rejected Peltz's proposals several times, calling
them "costly distractions that will harm shareholder interests."
A Wall Street survey conducted by Bernstein Research and released
earlier this month showed that a majority of institutional
investors, including PepsiCo's shareholders, support a split.
PepsiCo's shares closed little changed at $81.80 on the New York
Stock Exchange on Thursday.
(Reporting by Siddharth Cavale in
Bangalore; editing by Kirti Pandey)
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