Pepsi Responds to Peltz, Says Company Has Strong Plan For Growth (PEP)
At Wednesday's Delivering Alpha Conference in New York, famed investor Nelson Peltz announced an approximately $1.5 billion stake in Pepsi (NYSE: PEP).
Peltz said that he wants the company to buy Mondelez International (NASDAQ: MDLZ) for $35 per share in an effort to expand its food businesses.
Peltz began by saying that Pepsi shares have underperformed peers recently and that he wants the company to purchase Mondelez, which combined would value the firm at $175 per share. Peltz notes that he blames the company's problems on the current structure of the firm and not on management and that the acquisition of Mondelez would focus the firm more on the snack-foods business, which he sees as more valuable.
He also noted that two-thirds of Pepsi's value is in the snack-foods business and that the stock could be worth $144 per share if the company simply split the soft-drinks business from the snack-foods business.
Pepsi issued a statement after the bell in response to Peltz. The company stood behind its current strategy and noted that it will do anything it can to boost shareholder value.
"We have a strong growth strategy and structure in place, and our results to date and returns to our shareholders prove that we are a high performing company and our strategy is working. We continue to make significant progress against our strategic priorities and are focused on delivering results and driving long-term shareholder value. We are confident in our ability to deliver long-term shareholder value as an integrated food and beverage company.”
Despite giving back some gains after the bell, Pepsi shares rallied sharply into the close. Shares traded $85.25 after the close having hit a high of $85.51. Shares closed up 1.45 percent at $85.24.
Latest Ratings for PEP
|Sep 2014||Cowen & Company||Initiates Coverage on||Outperform|
|Aug 2014||Nomura||Initiates Coverage on||Reduce|
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