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PepsiCo has reached a strategic agreement with activist investment firm Elliott Management, aimed at improving operational efficiencies and avoiding a potentially costly proxy fight.

This deal comes in response to Elliott's significant $4 billion stake in the beverage and snack giant, which has raised concerns about the company’s performance, particularly in its North American division.

Under the terms of the agreement, PepsiCo has committed to a series of initiatives designed to streamline operations and boost profitability.

Key actions include reducing the number of products by 20%, simplifying ingredient lists and implementing price reductions on snacks.

The company will also focus on reorienting some products to include more protein, fibre and whole grains, aligning with current consumer trends toward healthier options.

Marc Steinberg, a partner at Elliott, said: “We appreciate our collaborative engagement with PepsiCo’s management team and the urgency they have demonstrated,” adding that the plan is expected to drive greater revenue and profit growth while creating substantial value for shareholders.

PepsiCo's strategy to enhance operational efficiency will also involve the closure of underperforming food manufacturing plants, with the first plant already shut down in July.

The company recently announced layoffs as part of its restructuring efforts, indicating a serious commitment to improving margins amid rising costs.

In terms of financial projections, PepsiCo anticipates revenue growth of 2% to 4% for the upcoming year, driven by improved margins in its North American food division and sustained momentum in its beverage business.

The company expects growth to trend towards the upper end of this range in the latter half of 2026.

Despite the positive developments, the agreement does not grant Elliott a seat on PepsiCo's board, nor does it commit to some of the more radical proposals made by the activist firm, such as outsourcing soda distribution to independent bottlers or divesting certain business segments.

Analysts suggest that while Elliott's engagement has instilled a sense of urgency in PepsiCo's operations, the fundamental strategy remains largely intact.

PepsiCo's stock price remained stable following the announcement, reflecting a market capitalisation of approximately $199 billion. The company's proactive measures come at a critical time as it faces challenges from changing consumer spending habits amid persistent inflation.