Elliott, PepsiCo near settlement as activist pressure shapes strategy: report

Core Insights - Activist investor Elliott Management is nearing a settlement with PepsiCo, indicating ongoing engagement between the two parties [1] - Elliott holds a $4 billion stake in PepsiCo and advocates for strategic changes to enhance share price and competitiveness [2] - PepsiCo's CEO acknowledges the constructive nature of discussions with Elliott, agreeing on the undervaluation of shares [3] Engagement and Demands - Elliott has called for a review of PepsiCo's North American bottling network, suggesting a decentralized model to improve margins [4] - The investor also recommends divesting non-core assets and increasing innovation in flagship brands [5] Financial Performance and Strategic Response - PepsiCo faces pressure as sales growth slows, with a recent revenue increase of only 1.3% and declining volumes in North American snacks and beverages [6] - The company is implementing cost cuts, closing two manufacturing plants, and reducing product lines by approximately 15% [7] - PepsiCo is also preparing to relaunch Gatorade and introduce new products like Propel, reflecting a shift in consumer preferences [8] Elliott's Broader Activism - Elliott manages over $70 billion in assets and has been active in various companies, including a recent $5 billion stake in Honeywell [10] - The firm is known for its aggressive campaigns, including a long-standing dispute with Argentina over defaulted bonds [11]