Peltz shakes up Pepsi with Cadbury buyout plan

Nelson Peltz wants Pepsi (in which he owns a share) to buy Mondelez, the owner of Cadbury (in which he also buys a share). Neither company seems enthusiastic...

by Emma Haslett
Last Updated: 18 Jul 2013
Is that a collective groan we hear from Cadbury workers? Activist investor Nelson Peltz has gone on record saying he wants PepsiCo to buy Cadbury owner Mondelez (nee Kraft).

Peltz isn’t popular among the ranks at Cadbury: he was the man who paved the way for Kraft’s (hostile) 7.5bn takeover of the confectionary manufacturer by pushing for it to separate from its less profitable beverage arm, Schweppes, which then became Dr Pepper Snapple.

After the takeover, Kraft promptly reneged on a promise not to shut its factory in Keynsham. Cue much ire from workers.

But now he’s at it again. In an interview with CNBC, he said ‘Pepsi right now doesn’t love the deals,’ adding that the company ‘is at a crossroads’.

He then went on to outline a deal, under the terms of which PepsiCo (in which his investment firm, Trian Partners, has a $951.8m stake) would buy Mondelez (in which Trian has a $1.23bn stake) at between $35 and $38 a share, valuing it at about $62bn. Once it’s merged, he wants PepsiCo to spin out its slow-growing soda business. Does Peltz have something against fizzy pop…?

Whatever his issues, he’s not wasting any time: Peltz said he has already organised a meeting with Irene Rosenfeld, the heavily-criticised chief executive of Mondelez, ‘in the next couple of weeks’.

What’s interesting about this is how public Peltz has been about it. Analysts reckon it’s calculated to drum up interest from shareholders – which suggests that interest in a Mondelez buyout from within PepsiCo is less than forthcoming.

Although Peltz refers in the interview to chief exec Indra Nooyi as a ‘good friend’, it sounds like he is struggling to muster much friendly support from Nooyi and the rest of PepsiCo’s management. As one investor told the FT: ‘he needs help on the Pepsi side of things’.

So Cadbury workers may yet be spared the upheaval of yet another buyout…

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