Pepsi To Buck Spinoff Fad, Hold On To Snack Foods, For Now
Despite calls by some investors to spin off its Frito-Lay snack food division, Pepsi(PEP) appears ready to
continue to remain a single entity. The company has languished during CEO Indra Nooyi’s tenure, rising just 1% in 5 years. The WSJ reports that “A breakup of the company appears unlikely, although the board has looked at the idea.”
Instead, the company plans to aggressively cut costs and employees, while increasing marketing spending on its beverage business.
Pepsi is no stranger to spinoffs, having spun off restaurant business Yum Brands(YUM
), parent of KFC, Pizza Hut, and Taco Bell. Investors have been eager to unlock the fast-growing snacks business from the slow-growing beverage business, but Pepsi management insists there is value from sharing distribution and other resources.
Disclosure: The author holds no position in any stock mentioned