Activist investor takes $4 billion stake in PepsiCo

Yeah, Pepsi’s fine. Or…is it?

Beverage giant PepsiCo has faltered in recent years, losing market share to soda-maker rivals. It recently ceded so much territory that its namesake brand, Pepsi, fell to fourth place based on US sales volume, losing out to Coca-Cola, Dr Pepper, and Sprite, per Beverage Digest data.

Now, PepsiCo’s activist investor, Elliott Investment Management, which has an approximately $4 billion stake in the company, wants to see some changes.

On Tuesday, Elliott sent a letter to the company’s board with a number of suggestions that it believes could push shares up by at least 50%, the Wall Street Journal first reported.

PepsiCo’s market value has dipped around 25% from a May 2023 peak of $270 billion, and now sits at $200 billion, per the Journal.

“While unfortunate, this disappointing trajectory has created a historic opportunity: With the right mindset and an appropriately ambitious turnaround plan, PepsiCo today represents a rare chance to revitalize a leading global enterprise and unlock significant shareholder value,” Elliott said in its letter, per CNBC.

In light of the company’s struggles, Elliott is recommending that PepsiCo follow in rival Coca-Cola’s footsteps to refranchise its bottling network, allowing local and independent bottlers to retain control. Coca-Cola made a similar move in 2017, with significant payoff.

The activist investor also wants the company to eliminate food and beverage offerings “that don’t sell well,” as well as share more concrete plans with investors to improve results, the Journal reported.

In a statement issued Tuesday, PepsiCo said the company will “review [Elliott’s proposal’s] perspectives within the context of our strategy to drive sustainable growth.”

The company added that it is “confident” in its strategy, which “includes targeted investments in innovation, portfolio transformation, and international growth as well as corporate-wide, multiyear productivity initiatives.”