PepsiCo Nixes Idea of Splitting Company As Frito-Lay Powers Sales Gains

PepsiCo Nixes Idea of Splitting Company As Frito-Lay Powers Sales Gains
February 18, 2014
Whatever Pepsi Beverages and Frito-Lay accomplish from here on out, they'll do it together. That was the unequivocal message of PepsiCo CEO Indra Nooyi in the company's fourth-quarter earnings report.

She acknowledged pressure from activist investor Nelson Peltz for the company to spin off the dwindling soft-drink business from the robust snack business; Peltz also has said he'd like to see Frito-Lay combine with Mondelez but recently dropped that idea after getting a seat on Mondelez's board.

Nooyi said that she even had external consultants and bankers look at the possibility of dividing beverages from snacks. But she said that the company would remain integrated after all in part as a matter of scale. "Decoupling our beverage and snaCk businesses in North America would significantly reduce our relevance to our customers," Nooyi said, according to Reuters.

"Within most of our largest grocery-channel customers, we [would] fall from being the top supplier to a top four or below supplier, and the mass merchant drug channels, we would drop below the top 10."
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