PepsiCo Inc. said on Thursday that it had decided not to spin off its North American beverage business, effectively rejecting a push by the activist investor Nelson Peltz.
In a public filing, Pepsi said it came to its conclusion after enlisting bankers and consultants to perform an “exhaustive review†of the business. Ultimately, Pepsi determined it had enough reason to keep the unit, including the amount of free cash flow it generates and how much it expects beverages to “benefit from planned productivity and innovation initiatives.â€
Mr. Peltz has pushed for months for Pepsi to carve up its various snack and soft drink units, or merge with Mondelez International, the snack business spun off by Kraft in 2012. Mr. Peltz’s investment firm Trian Fund Management has amassed a stake in both companies of more than $2.7 billion.
A spokesman for Trian declined to comment.
Pressure had been mounting for Pepsi to respond to Mr. Peltz’s overtures. In January, the company got a little breathing room when Mr. Peltz won a seat on Mondelez’s board, which ended his attempts to push the two food giants together.
Pepsi’s North American soft drink business has been slumping, with revenue down 2 percent in 2013. In the past, Mr. Peltz has called the beverage business “wonderful†but stagnant.
“The carbonated soft drink business is just not growing,†Mr. Peltz said in July. “Tastes change, people change.â€
But Pepsi reaffirmed its commitment to that business on Thursday, saying it was among the most important to its retail customers.
A representative for Pepsi did not immediately respond to requests for further comment.
While the beverage business sagged in 2013, Pepsi’s profits received a lift from its North American snack products, which include the Frito-Lay and Quaker brands. Net revenue from its snack business rose 5 percent last year, to $25 billion.
