PepsiCo had rejected a white paper from Trian

PepsiCo had rejected a white paper from Trian

Nelson Peltz has called on PepsiCo to deliver “not just platitudes and rhetoric”, in an open letter demanding the soft drinks company outline in detail why it refuses to split its beverage and snacks units.

The letter, sent by the activist investor's Trian Fund Management yesterday (13 March) to PepsiCo's board, asks PepsiCo to release a raft of financial data, including proof it is not losing beverage share to rival the Coca-Cola Co. Trian said the information is vital to back up PepsiCo's claims that Trian's case for a beverage and snacks separation is based on selective and misused data.

PepsiCo made those claims in a letter to Peltz, sent by PepsiCo director Ian Cook last month, that dismissed a Trian white paper in support of a split.

Trian wrote yesterday: “The dismissive tone of his (Cook's) letter suggests that you do not appreciate the degree to which PepsiCo’s shareholders, the owners of the company, are frustrated. Given the company’s prolonged underperformance, we believe the board and management are obligated to provide shareholders substance and analytics - not just platitudes and rhetoric - to defend the alleged benefits of the 'Power of One'.”

Peltz first called for a split of PepsiCo into a fast-growth snacks business and a slow-growth beverages unit last year. He suggested the snacks arm should be merged with Mondelez International, but dropped the call in January when Mondelez offered him a board seat.

Stifel analyst Mark Swartzberg said today that Peltz is right to push PepsiCo for answers, and has the backing of shareholders.

“We continue to favour splitting PepsiCo into separate food and beverage companies," said Swartzberg. "A large percentage of PepsiCo shareholders also favour such a move, as shown in a recent competitor survey.”

In the letter, Trian accused PepsiCo of "financial engineering" after last month's full-year results, because it increased share repurchase and dividend programmes despite weak performance. Trian also said suggestions that a standalone PepsiCo beverages entity would be overwhelmed by Coca-Cola were “a red herring”.