PepsiCo Faces Activist Shockwave as Elliott's $4 Billion Push Nears a Deal
Elliott Investment Management is nearing a settlement with PepsiCo after acquiring a $4 billion stake, aiming to revitalize the company's stock performance. The activist investor suggests refranchising bottling operations and divesting underperforming assets. PepsiCo's shares have declined, and its growth has slowed, prompting Elliott's push for strategic changes. CEO Ramon Laguarta acknowledges the constructive dialogue with Elliott, emphasizing the company's undervaluation. This move follows Elliott's similar engagements with Honeywell and Starbucks, highlighting its strategy to influence major corporations.
Elliott Investment Management is closing in on a settlement with PepsiCo , a pivot that could surface soon and reshape the conversation inside one of America's biggest consumer brands. The activist unveiled a roughly $4 billion stake in September and has been pushing for moves it believes could help revive a stock that is down around 8% over the past year against a more than 12% rise in the S&P 500. The playbook includes a possible refranchising of bottling operations and exploring divestitures of underperforming food assets a bid to inject urgency into a company long known for its stable, steady profile.
PepsiCo's numbers show why Elliott is pressing the case. Shares were trading at $147.26 midday, giving the company a market value of roughly $201 billion, while organic revenue growth in the latest quarter rose 1.3% when excluding foreign exchange, acquisitions and divestitures. Volumes in North American food and beverage units also declined year over year, raising questions about how quickly momentum could return. CEO Ramon Laguarta, who has led the company since October 2018, has emphasized cost discipline including plant closures and reiterated in October that the dialogue with Elliott has been very constructive and collaborative. He also said both sides believe the company is undervalued. PepsiCo has been reshaping its leadership bench as well, bringing in Walmart executive Steve Schmitt to replace retiring finance chief Jamie Caulfield.
For Elliott, PepsiCo marks another large-cap target in a streak of high-profile engagements. The investor took a more than $5 billion stake in Honeywell International late last year and called for the conglomerate to break itself up before Honeywell announced plans to do so, ultimately securing a board seat. Elliott has also built a significant position in Starbucks. Against that backdrop, a settlement with PepsiCo could be the next chapter in the firm's broader effort to drive strategic pivots at household names at a moment when the company's slower growth profile stands in contrast to the double-digit increases it reported a few years ago.
