Blog: Could proxy fight hit PepsiCo?
Dean Best | 17 July 2014
Nelson Peltz is not letting go. The US billionaire investor is continuing in his quest to get PepsiCo to split in two - and has reportedly suggested a proxy battle with the company could be on the horizon.
Peltz wants PepsiCo to divide its snack business from its drinks unit but, despite his public criticism of the company's performance, the Lay's crisps maker is remained steadfast in its commitment to its model.
Yesterday, Peltz made his latest pronouncements on the situation at a conference in New York convened by CNBC.
According to the news channel, Peltz said he "most definitely" wants PepsiCo to split in two and that there "could be" a proxy battle. "We have definitely not disappeared from the scene," Peltz said.
"Over the last five or six months, we've met with about 100 of the top shareholders of Pepsi. The stock has moved up dramatically. It hasn't moved up because of earnings. They had a big reset a couple of years ago and they haven't even got to the guidance they gave in '12. The company is not being managed well."
Peltz insisted PepsiCo's shares had risen because Trian's "message is resonating with the shareholders of Pepsi". He said: "And I urge you to watch this space and see what happens."
Asked to clarify, Peltz said: "There will be action." Pressed if there could be a proxy battle, the investor replied: "Could be", although when questioned if Trian would pursue a battle, he added: "No, you're hearing me answer a question that [a proxy fight] is a possibility.
The fact Peltz is still hammering away at PepsiCo over a year after first suggesting the company split in two (at that time he was calling for PepsiCo to merge with Mondelez and spin off the drinks division) indicates the investor still believes he could win enough shareholder support to put pressure on the board.
In February, analysts at Sanford Bernstein last month published a survey of 100 PepsiCo investors. Some 55% of the shareholders surveyed said the company should split.
Nevertheless, PepsiCo has so far stood firm. Weeks after that survey - and in the wake of comments from Peltz for the company to use more than "platitudes and rhetoric" to defend its position - PepsiCo insisted "sustained value creation" for its shareholders was "best optimised as an integrated food and beverage company".
Peltz, however, is not going away.
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