Relational Investors takes stake in PepsiCo

According to reports in the Wall Street Journal and Financial Times, an activist investor has taken a $600m stake in PepsiCo. The move is thought to be sparked by rumours that the US snacks and drinks company is considering splitting off its beverage and snacks businesses.

In a regulatory filing on Tuesday 15 May, Relational Investors, run by Ralph Whitworth, disclosed that it has acquired nearly nine million PepsiCo shares – representing about 0.6% of the company, which has a market capitalisation of over $100bn.

Relational began acquiring PepsiCo shares towards the end of 2011 and has been calling for the company to split its snack and beverage businesses into two separate, independent units.

With the company’s flagship brand losing market share to Coca-Cola, PepsiCo responded to investors' concerns that the company’s stock price has been stagnant in February and announced that it was cutting 8,700 jobs and investing up to $600m in its biggest brands.

Calls to split the two units have been continuously rejected by PepsiCo, with CEO Indra Nooyi stating that they are too closely tied and that a division would increase overall operating costs.

Source: Wall Street Journal/Financial Times