Will This Investor Force Pepsi to Shake It Up?
Activist investor Ralph Whitworth said in a regulatory filing that he had acquired a $600 million stake in PepsiCo (NYSE:PEP) and had held meetings with company executives. Whitworth’s Relational Investors held about 9 million shares in PepsiCo as of March 31, according to the filing, amounting to a 0.6 percent stake in the company. The development is leading to speculation that Whitworth may pressurize the company to make changes.
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Whitworth’s firm is known for taking stakes in companies it believes need to add shareholder value or improve their corporate governance. Relational also holds positions in Guaranty Bancorp (NASDAQ:GBNK), Par Pharmaceutical Companies (NYSE:PRX), and Quest Diagnostics (NYSE:DGX), while Whitworth is on the board of Hewlett-Packard (NYSE:HPQ).
PepsiCo’s underperforming stock and market share loss to rival Coca-Cola (NYSE:KO) has earned it much investor dissatisfaction recently. Its Pepsi drink also recently lost the No. 2 spot in the U.S. to Diet Coke, with Coca-Cola staying in the top spot.
There has been speculation that chief executive Indra Nooyi may leave the company and that its soda and snacks businesses may be split up. PepsiCo is also trying to put more money into marketing and has plans to hike advertising to 5.7 percent of its net revenue this year from the current 5.2 percent. It also cut 8,700 jobs in February, but has already warned that profit will fall 5 percent this year.
In March, PepsiCo appointed former Wal-Mart (NYSE:WMT) executive Brian Cornell as the head of its Americas-wide food division, which is the company’s largest and most profitable unit. Cornell is said to be one of Nooyi’s possible successors.
“Our senior management meets regularly with investors, and Relational is a respected institution,” PepsiCo said in a statement, confirming that Whitworth had met with its board.
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