By Aditi Shrivastava and Lisa Baertlein
Jan 21 Mondelez International Inc,
maker of Cadbury chocolate and Oreo cookies, on Tuesday added
activist investor Nelson Peltz to its board in a compromise
agreement that ends his campaign to have PepsiCo Inc
take over the company.
Analysts now expect the influential investor to separately
lobby each company to improve their results.
Last year, Peltz urged Mondelez to sell itself to the
beverage and snacks giant, but PepsiCo balked at such a deal.
Trian is Mondelez's fourth-largest shareholder, with a 2.3
percent stake, according to Thomson Reuters data. Trian also
owns 0.8 percent of PepsiCo.
Peltz last summer said PepsiCo was at a "strategic
crossroads" due to changing consumer tastes and the rising
importance of emerging markets, and outlined two scenarios for
Plan A was to merge PepsiCo with Mondelez to create a larger
company with one of the most valuable brand portfolios in the
world. Plan B called for Pepsi to split its snacks and beverages
businesses - which would allow each to focus on operational
"Given that Pepsi's not interested in Plan A, we are
encouraging them to pursue Plan B," Anne Tarbell, a spokeswoman
for Peltz's Trian Fund Management, told Reuters.
Peltz, 71, also has pushed Mondelez - whose performance has
fallen short of investor expectations since it was split from
Kraft in October 2012 - to manage its costs better, saying it
could double earnings per share by doing so.
Peltz has been instrumental in numerous food and beverages
mergers and divestitures at companies he believed were
underperforming - including a series of deals that led to the
creation of Mondelez.
Mondelez shares fell as much as 3.7 percent in morning trade
on Tuesday as hopes for a deal with PepsiCo evaporated.
The shares were down 0.8 percent at $34.42 in afternoon
trade on the Nasdaq, while PepsiCo shares were up 0.8 percent at
$82.98 on the New York Stock Exchange.
"While this may have been disappointing for some investors,
we see this as a very amicable outcome that now allows the
management team and board (at Mondelez) to focus on running the
business," Bernstein Research analyst Alexia Howard wrote in a
Adding Peltz to the Mondelez board increased its size to 12,
with 11 directors independent.
The move also eliminated the risk of an expensive and
lengthy proxy battle, J.P. Morgan analyst Ken Goldman said in a
Peltz helped orchestrate the 2008 spinoff of Dr Pepper
Snapple Group from Cadbury, Kraft's purchase of Cadbury,
and the subsequent breakup of Kraft into Mondelez and Kraft
Foods Group Inc.
In addition to Mondelez and PepsiCo, Peltz's New York-based
hedge fund's top five holdings include Wendy's Co,
Family Dollar Stores Inc and Ingersoll-Rand Plc.