PepsiCo Denies Rumors Of Potential Merger (PEP, MDLZ)
On Friday it was reported that activist investor Nelson Peltz had acquired stakes in PepsiCo, Inc. (PEP) and Mondelez (MDLZ) with the hopes of pushing for a merger of the two. However, PepsiCo released a statement saying it was not interested in such an acquisition.
Peltz is known for making big investments in companies and then forcing change. An anonymous sourced told the Daily Telegraph that over the past couple of weeks that Peltz had been gradually building stakes in both PEP and MLDZ.
There has been speculation that PepsiCo would spin off its underperforming beverage operation from its booming snack foods division. Though PepsiCo has denied such a possibility, it still has reviewed options for restructuring the North American beverage business.
If a spin off were to occur, analysts say that the company would want to make a major acquisition to remain as big as it is today. This is where the talks of a PepsiCo and Mondelez merger seems more like a possibility. Even though PepsiCo denies such talks, it does not necessarily mean it will not happen in the future.
Analysts have said that a PepsiCo and Mondelez merger could work because the companies have complementary market shares in different areas of the globe.
PepsiCo said in a short statement that it doesn’t comment on rumors or speculation. Moreover, Mondelez also said it was content with its current portfolio. However, this does not mean that a potential deal is dead.
PepsiCo shares were up 21 cents, or +0.27%, during pre-market trading on Monday. The stock is up +20.43% over the past year.
The Bottom Line
Shares of PepsiCo (PEP) have a dividend yield of 2.89% based on Friday’s closing price of $78.64 and the company’s annualized dividend payout of $2.27 per share.
PepsiCo, Inc. (PEP) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.
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