A player with two balls: The future of PepsiCo beverages

The player is called Nelson Peltz, born 71 years ago in New York, is a millionaire and has become famous for its performance in the not always fair game business. He is known for investing in food businesses and catering to raise the price of the shares and then sell them.

One of his more elaborate plays was made in 1997 when he acquired Snaplle company for $ 300 million, after sanearla, which was sold three years later to Cadbury for $ 1,500 million. In 2008, he persuaded Cadbury to dispense with the popular Dr. Pepper-carbonated beverage-two years later Cadbury was acquired by Kraft and 18 months later, prompted Kraft to split into two: KFG, which concentrated the food business ( cheese, soups, etc.). and Mondelez International, which is snacks sector (chocolates, biscuits, chewing gum, candies, etc..).

In the last six years Peltz has invested in companies like Cadbury Schweppes, Heinz and Kraft Foods, with the characteristic that in all operational changes occurred. Last year it acquired the shares of multinational Danone, and does not seem a coincidence that since then the company comes announcing plans to streamline operations in Europe, where sales and profits fell in 2012.

His last play known occurred in March of this year, when it acquired shares in Mondelez International and PepsiCo, with an investment of 2,000 million dollars through one investment fund Trian Fund Management property.

British newspaper The Telegraph reported that the intention of Peltz would seek the merger of both companies. According to rumors circulating, the investor intends to leave his unit PepsiCo beverages-which bypasses a good time, and acquire Mondelez International. While both companies have denied this possibility, Peltz said he met with the CEO of PepsiCo, Indra Nooyi, to discuss the plan and that the same was planned soon with Irene Rosenfield, CEO of Mondelez. If realized the merger would create a giant sweet and savory snacks company, with a large number of valuable global brands.

So one of the balls Peltz playing with PepsiCo is a well-known strategy, so we will not stop in its analysis. However, to understand what the player is pretending, remember that PepsiCo is the product of a merger occurred in 1985 between Pepsi and Frito Lay. Currently, on the one hand there is the beverage division, with brands such as Pepsi, Mirinda and some waters, with subsequent acquisitions as Gatorade, SoBe and Tropicana and on the other hand the food division, where we find Lay’s, Doritos, Cheetos, Walkers, Sabritas, Halls, and Quaker brands acquired in 2001.

This is a company that is in first or second position in almost all markets where it operates. In addition, the food division of PepsiCo already works quite independently from Texas. There are shareholders, who now would add Peltz, who understand that both food and beverage business, would have more value-apart than together.

The other ball is Mondelez, as we saw earlier born from Kraft Division, headquartered in Deerfield Township (Illinois), is present in over 80 countries with 100,000 employees and annual revenues of 32,000 million.

Amid this background the question arises: what about Pepsi? And is there another global player appears also a specialist in mergers, like well-known AB InBev? It is known that the origins of this crime are found in Brazil (when in the 90`s brewers Brahma and Antarctica merged) and in this country for many years, and AB InBev is the bottler and distributor of Pepsi brands. This partnership has been extended to other countries, for example Uruguay, reaching even the level of joint procurement of raw materials. According to the strategy we have been observing from these global players, it seems logical that by merging operations PepsiCo and AB InBev can create the largest bottler worldwide.

From the workers point of view of, except the usual job losses that occur when mergers of this type take place, there is not much to expect. With the three companies mentioned, PepsiCo International, AB InBev and Mondelez right now, somewhere in the world, an IUF affiliate is in conflict. The slogan then is to remain vigilant and intensify solidarity.

Enildo Iglesias
Montevideo

Find the original story in Spanish here.