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

Activist investor Elliott Management is close to reaching a settlement agreement with PepsiCo, the Wall Street Journal reported on Thursday, citing people familiar with the matter.

The deal’s contours remain unclear, but a resolution would mark the latest in a series of engagements between one of the world’s most influential activist investors and the US beverages and snacks major.

Elliott disclosed a roughly $4 billion stake in PepsiCo in September and has since pushed the company to accelerate efforts to lift its share price, revive its soda division and sharpen its competitive edge across key markets.

The investor believes PepsiCo shares could gain at least 50% if the company adopts a more rigorous strategic and operational overhaul.

Collaborative engagement, but open questions on bottling

PepsiCo chief executive Ramon Laguarta has repeatedly described the company’s talks with Elliott as constructive.

In October, he said he agreed with Elliott’s assessment that the company’s shares were undervalued and noted that several of the investor’s proposals were already reflected in PepsiCo’s long-term strategy.

However, PepsiCo has not provided clarity on one of Elliott’s headline demands: a review of its vast North American bottling network, including the potential refranchising of those operations to boost margins.

PepsiCo retains significant control of its bottling in contrast to rival Coca-Cola, and Elliott has argued that a more decentralised model could unlock considerable value.

Elliott has also urged the company to streamline its portfolio by divesting non-core and underperforming assets, while intensifying innovation across its flagship brands.

Cost cuts and brand revamps shape PepsiCo’s response

PepsiCo has been under pressure to revive momentum as sales growth cools from the double-digit expansion seen in recent years.

In the most recent quarter, revenue rose just 1.3%, stripping out currency movements and M&A, while volumes in North American snacks and beverages fell year on year.

The company has responded with a mix of cost cuts and brand refreshes.

It has closed two US manufacturing plants, reduced its product lines by about 15% and highlighted further efficiencies under review.

PepsiCo also appointed Steve Schmitt, a Walmart executive, as its incoming chief financial officer after Jamie Caulfield announced his retirement.

At the same time, the company is betting on shifting consumer preferences.

It is preparing a relaunch of Gatorade and has introduced updated versions of Lay’s and Tostitos.

In beverages, PepsiCo plans to roll out a new Propel drink with electrolytes, fibre and protein, building on the company’s acquisition of prebiotic soda brand Poppi.

Elliott’s wider campaign across corporate America

Elliott, which manages more than $70 billion in assets, has been one of the busiest activists in global markets.

It recently amassed a more than $5 billion stake in Honeywell International, pushing the conglomerate to break itself up, ultimately securing a board seat.

The firm has also built large stakes in Starbucks, Phillips 66 and Southwest Airlines, pressing for accelerated operational and strategic changes.

The investor is known for its long and aggressive campaigns, including a 15-year battle with Argentina over defaulted bonds that ended in a $2.4 billion settlement.

Its engagement with PepsiCo now appears headed toward a negotiated outcome, marking a pivotal moment for a consumer goods giant navigating slowing growth and shifting consumer tastes.