Trian Fund Management, the investment vehicle of activist shareholder Nelson Peltz, has said PepsiCo should merge with Mondelez International and spin off its beverages business.

Peltz, which this year tripled his stake in PepsiCo to 12m shares and is now the sixth largest shareholder in Mondelez, said 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.

He said that Trian believes PepsiCo’s structure is “increasingly unmanageable”.

“While it has a leading portfolio of 22 billion-dollar brands, PepsiCo has underperformed its peers as it grapples with the differing needs of its fast-growth (snacks) and slow-growth (beverages) businesses and the resulting inherent conflict in allocating its resources.”

As a result, Peltz says the best way to maximise value at the company would be to merge with Mondelez, creating a leading global snacks company with one of the most valuable brand portfolios in the world.

“PepsiCo could then use this merger as a catalyst to spin off its beverages business,” he said. “This approach would create substantial cost and revenue synergies and the opportunity for margin and capital structure efficiencies.”

With substantial overlap between PepsiCo’s and Mondelez’s largest shareholders, both companies’ shareholders would benefit, Trian argued. The investment firm estimated that the move could lead to approximately $175 of implied value per PepsiCo share and approximately $72 of implied value per Mondelez share, by the end of 2015.

The suggestions by Peltz were published in a detailed ‘White Paper’ on Trian’s website. If PepsiCo declines to buy Mondelez, an alternative, or “Plan B” should be to separate beverages from the snacks business, he said.

“We believe a separation will create a focused snacks leader positioned to have its trading multiple re-rated as it delivers attractive growth and productivity initiatives that hit the bottom line,” he noted.

As just-food’s Katy Askew argued earlier this year, when speculation first emerged that Peltz could be buying up shares in the US food firms, a merger between the two groups could bring a number of strategic advantages.

Both Mondelez and PepsiCo would boost their presence in emerging markets, as each firm would benefit from the other’s distribution channels. At the same time, PepsiCo’s strength in the US would calm investor jitters over Mondelez’s exposure to higher growth – but higher risk – emerging markets.

The combined group would also benefit from a stronger snack portfolio: combining PepsiCo’s might in salty snacks with Mondelez’s hefty position in confectionery and sweet biscuits.

PepsiCo, however, has previously played down the need for “large scale” M&A, but has admitted it has engaged in talks with Peltz.

Peltz told CNBC he is meeting with Mondelez chief executive Irene Rosenfeld in the next couple of weeks.

PepsiCo could not be reached for comment at the time of going to press.