Activist investor Elliott Investment Management has disclosed that they have built a $4 billion stake in PepsiCo Inc. (Nasdaq: PEP) and are pushing for sweeping changes at the struggling beverage and snack giant, including potential asset sales and operational overhauls.
The investment makes Elliott one of PepsiCo’s largest active shareholders and represents one of the activist firm’s biggest bets. PepsiCo shares jumped as much as 5% in morning trading Tuesday following the disclosure.
The Wall Street Journal first reported Elliott’s stake on Tuesday.
Elliott sent a detailed presentation to PepsiCo’s board calling the company “a dramatic under-performer” at “a critical inflection point.” The firm believes the stock could rise more than 50% with proper changes.
The activist investor specifically targeted PepsiCo’s North American beverage division, which it said has “underperformed its peers for more than a decade on both growth and margins.” Elliott recommended that the company consider refranchising its bottling network and streamlining its beverage portfolio.
PepsiCo has faced mounting challenges as it loses market share to rivals. Dr Pepper (Nasdaq: KDP) overtook Pepsi as the nation’s second-largest soda brand in 2024, while Coca-Cola (NYSE: KO) continues to dominate. The company’s snack business, once a reliable growth driver, has also stumbled as price-conscious consumers cut back.
“PepsiCo maintains an active and productive dialogue with our shareholders and values constructive input on delivering long-term shareholder value,” the company said in a statement. It added that it would review Elliott’s perspectives within the context of its growth strategy.
The company’s stock has declined by about 13% over the past year, as markets have climbed higher. Elliott manages approximately $76.1 billion in assets and has a history of successful activist campaigns at major corporations, including Starbucks (Nasdaq: SBUX) and Southwest Airlines (NYSE: LUV).
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