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 Ralph Whitworth's track record involvement includes Occidental Petroleum, Genzyme, Sprint Nextel, Home Depot, Sovereign Bancorp, Waste Management, Hewlett-Packard is expected to reignite markets questions about the merits of a split," writes Bank of America Merrill Lynch analyst Bryan Spillane in a note to clients reacting to Relational's disclosure that it holds roughly 9 million PepsiCo shares after nearly doubling its stake in the most recent quarter.

"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."