A prominent activist investment firm has taken a substantial position in beverage and snack giant PepsiCo, initiating a campaign for significant strategic changes. Elliott Management, which has built a stake worth approximately $4 billion, is pressuring the company’s board for a comprehensive operational and strategic review. The investor cites disappointing financial performance and a lagging share price as the primary catalysts for its involvement, projecting that its proposed changes could unlock more than 50% in value.
The demands were formally presented to PepsiCo’s board of directors, moving beyond mere suggestions to a detailed plan for a corporate turnaround. Central to Elliott’s proposal is a call to simplify the company’s extensive brand portfolio, potentially through the divestiture of underperforming units, particularly within its North American operations. Furthermore, the activist recommends a thorough evaluation of its in-house bottling network, suggesting a model more aligned with those of its key competitors.
This push for a radical transformation comes at a challenging time for the company. PepsiCo’s own financial guidance for the 2025 fiscal year failed to meet market expectations, adding credence to the argument for immediate action.
Should investors sell immediately? Or is it worth buying Pepsi?
The company’s 2025 outlook includes:
* Earnings per share: Expected to remain flat with the 2024 result of $8.16
* Revenue growth: Projected to be in the low single-digits on an organic basis
* Shareholder returns: Planned distributions of $8.6 billion, comprising $7.6 billion in dividends and $1.0 billion in share repurchases
A quarterly dividend of $1.4225 per share is anticipated to be paid on September 30, 2025.
The stock now faces competing pressures. While Elliott’s long-term strategic proposals could create substantial value, the process of implementing them might pressure short-term earnings. All eyes are on the upcoming quarterly earnings release scheduled for October 9, 2025, which is seen as a critical juncture. PepsiCo’s management is expected to address the activist’s campaign and outline its strategic response, a decision that will significantly influence the company’s future trajectory.
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