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January 21, 2014 6:00 pm
Nelson Peltz, the activist investor, will drop his campaign for PepsiCo to buy Mondelez International, the snacks business behind Oreo cookies, Cadbury chocolate and Trident gum, after Mondelez added him to its board on Tuesday.
Mr Peltz’s Trian Fund Management has billion-dollar stakes in both companies.
“Now that Nelson Peltz is a director [at Mondelez], as long as Trian is a significant shareholder of PepsiCo, Mr Peltz will recuse himself from discussions pertaining to PepsiCo,” said Anne Tarbell, a spokeswoman for Trian.
As PepsiCo has made clear that it is not interested in pursuing a merger with Mondelez, Mr Peltz will instead encourage PepsiCo to separate its snacks and beverages divisions, Ms Tarbell said.
PepsiCo is nevertheless considering restructuring its underperforming North American beverage business, which has suffered from declining US demand for fizzy drinks. It intends to update shareholders in February. The company declined to comment on Tuesday.
Trian is Mondelez’s fourth-largest shareholder, with a 2.3 per cent stake, according to Thomson Reuters data. Mr Peltz will stand for election to the board, which would expand to 12 members with his addition, at the annual meeting later this year.
In a statement, Mr Peltz said his focus would be “driving growth, improving margins and increasing value for all shareholders”. In October, he criticised Mondelez’s profit margins, telling a conference in Chicago it had not done enough to control costs.
Mr Peltz has been a central player in the evolution of Mondelez. He advocated the spin-off of Dr Pepper Snapple from Cadbury, the purchase of Cadbury by Kraft and the break-up of Kraft into Mondelez and Kraft Foods Group.
Mondelez has struggled since the split, with chief executive Irene Rosenfeld acknowledging early “executional missteps” in Brazil and Russia, markets which are important to the company’s emerging markets-focused strategy.
Amid criticism that the company has not lived up to the fast growth executives promised when it was spun off, Mondelez in September announced a plan to streamline its supply chain and increase manufacturing efficiency, saying this would deliver $3bn in gross productivity savings over three years.
Shares in Mondelez were down 2.6 per cent to $34.33 in afternoon trading in New York. PepsiCo was 0.8 per cent higher at $82.85.
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