A Pepsi Split-Up Will Come After Turnaround (Update 1)
Updated to reflect CLSA analyst comment and updated share prices.
NEW YORK (TheStreet) -- Although activist shareholder Ralph Whitworth of Relational Investors has built up a stake in PepsiCo(PEP) now worth $610 million and opened dialogue with management, investors may be wise to temper expectations of a split between the company's foods and beverages businesses.
In opening conversation with the activist, PepsiCo acknowledges that Relational is a credible shareholder. More importantly, Relational has helped push spinoffs at ITT Corp(ITT) , L-3 Communications(LLL) and Whitworth even recently gained a board seat on Hewlett Packard(HPQ) . Still, the much ballyhooed breakup of the company is years away and would likely only come amid continued underperformance relative to Warren Buffett's biggest holding Coca-Cola(KO) , Wall Street analysts say.
"While the equity stake is relatively small, Relational and founder
"We have had constructive meetings with Relational," said PepsiCo spokesperson Jeff Dahncke in a statement. "Our senior management meets regularly with investors, and Relational is a respected institution."