Activist investor Nelson Peltz has won the support of the California State Teachers’ Retirement System, one of the largest pension funds in the US, in his campaign against PepsiCo., the NY Times reported.
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Last month the retirement system, known as Calstrs, sent a letter to a senior PepsiCo director, demanding that the company put Peltz on the board.
Mr. Peltz’s hedge fund, Trian Partners, which owns a 0.8 percent stake in the company, has locked horns with PepsiCo management for a year, calling on it publicly to separate its snacks and beverage businesses – but to no avail.
PepsiCo announced that, following an “exhaustive review, ” its board decided that the beverage unit should stay in the company.
So Trian met with close to 100 of PepsiCo’s largest shareholders, Peltz told an audience of hedge fund insiders last week, at a CNBC conference in New York.
“We definitely haven’t disappeared from the scene, ” Peltz said, “there will be action.”
Mr. Peltz is in the business of quietly buying stakes in companies with an unimpressive performance, then pressing management to improve performance.
Last year, Trian bought $2.7 billion worth of stock in PepsiCo as well as Mondelez International, another food company, and tried to force the two companies to merge.
Mr. Peltz has since joined the board of Mondelez.
Trian is still recommending that PepsiCo separate its snack and beverage units, regardless of whether or not they merge with Mondelez.
Calstrs has teamed up with Trian on other activist campaigns, and let the hedge fund have the money it needed to invest in companies on its behalf. According to the NY Times, it made a co-investment with Trian in Ingersoll-Rand, and supported Trian during its proxy fight with Heinz in 2006.