| NEW YORK, July 17
NEW YORK, July 17 A timeframe agreed upon
between PepsiCo Inc and Trian Fund Management's Nelson
Peltz to privately address the activist investor's suggestions
for improving shareholder returns may be closing, according to
three sources familiar with the matter.
Peltz, who has played a role in some of the global food
industry's biggest deals, revealed a stake in PepsiCo in April.
The soft drink and snack maker said at the time that it had held
meetings with Trian "to discuss and consider their ideas". It
did not say what those ideas were, though a concurrent purchase
of Oreo cookie maker Mondelez International Inc shares
fueled speculation Peltz would push for a merger.
As of March 31, Trian owned 12 million shares of PepsiCo and
40.3 million shares of Mondelez, worth a combined total of $2.19
billion, according to a regulatory filing.
Following discussions that occurred in the spring, Trian and
PepsiCo agreed on a timeframe to privately consider the
suggestions, which include the purchase of Mondelez, strategic
options for the North American beverage business, and more
cost-cutting, according to the sources.
While talks are ongoing and continue to be constructive, the
sources say that initial period is up, leading some to believe
that Trian could soon go public with its concerns about PepsiCo
if the company does not reply to them.
PepsiCo declined to comment. Trian was not immediately
Peltz is scheduled to do an interview on CNBC cable
television on Wednesday afternoon.
Another source, who declined to be identified, said Peltz
usually prefers private, cooperative discussions with management
over contentious, public situations and likes to give companies
PepsiCo shares rose nearly 24 percent this year through
Monday, touching an all-time high and outperforming a 13 percent
gain for rival Coca-Cola Co. Given the company's strong
performance recently, drastic actions may not be needed, said
Sanford Bernstein analyst Ali Dibadj.
"Oftentimes companies react if they're put under pressure by
activists in doing some of the right things from a shareholder
perspective, like returning cash to shareholders, increasing the
dividend, maybe structural changes," Dibadj said. "My sense is
that at this point they can still deliver okay numbers relative
to some expectations. They may not need to do that."
Of the options discussed, several are already on the table.
PepsiCo has said publicly that it is exploring structural
alternatives for its North American beverage business but does
not plan to discuss it until early next year.
It is also already in the midst of a 3-year productivity
program aimed at saving $3 billion by the end of 2014. In
addition to cutting some 8,700 jobs, the company has streamlined
its supply chain and boosted its efficiency.
As for acquisitions, PepsiCo has said it sees no need for
large deals, though it says it could spend less than $500
million a year on small tuck-in acquisitions.