Rumors of PepsiCo Split Grow on 13 Percent Rise in Profit

Wayne Ellis

[Pepsi logo]

Rumors of PepsiCo Split Grow on 13 Percent Rise in Profit (Bloomberg)

The chorus of investors clamoring for the world’s second-largest soda and snack maker, PepsiCo (PEP), to split is getting louder. Led by activist investor Nelson Peltz, proponents of the split want the company’s dominant snacks division (maker of Lays and Doritos products, among others) to break away from its struggling beverages division. Reinforcing this sentiment, Q114 earnings reflect that the company as a whole came in 13 percent above revenue estimates, but that profitability was almost wholly driven by the snacks division. Peltz and others argue that splitting the company would slash costs, improve marketing efforts and create faster growth. However, PepsiCo’s CFO Hugh Johnston countered, “Investors are likely to be very happy with what they are seeing out of PepsiCo right now, I don’t know why you’d want to disrupt it.”

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