Blog: Buffett not sharing Peltz PepsiCo split sentiment

Michelle Russell | 16 October 2013

It seems US business magnate Warren Buffett has very different views to activist investor Nelson Peltz on whether PepsiCo would benefit from a split.

Major stakeholder Peltz has been pushing for some time for PepsiCo's snacks and beverage divisions to operate as two separate companies. He first backed a plan that would split the divisions - and then potentially merge the latter with Mondelez International - earlier this summer.

In a so-called 'White Paper', Peltz argued that PepsiCo is at "a strategic crossroads" and that changing consumer tastes and the increased importance of emerging markets have changed the outlook for its key businesses.

However, Buffett offered a different view when speaking to CNBC this morning. Although not a PepsiCo shareholder, the activist investor said he would not split the company, when asked if he shared Peltz's sentiment on such a move.

"No, if I own Pepsi - if I own control of the company I'd keep both - they're both - well one of them is a terrific business and the other is a perfectly good business and why break them up," he told Andrew Sorkin.

"I believe in in running the company for shareholders that are going to stay, rather than the ones that are going to leave and if you are going to stay as a shareholder of Pepsi I think you like the idea of them having two good businesses."

Buffett's views are unlikely to deter Peltz in his quest to seek a split but, regardless. Any decision on such a move appears unlikely to be made any time soon anyway. Peltz will just have to be content, for the time being, with PepsiCo's increase in year-to-date earnings and sales issued by the firm this morning.

Click here to view the interview.


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