Shares of PepsiCo, Inc. (PEP - Analyst Report) reached a 52-week high of $76.33 on Friday, Mar 22, 2013, amid rumors of its possible merger with food giant, Mondelez International, Inc. (MDLZ - Analyst Report). This high beat PepsiCo’s previous 52-week high of $76.33, reached on Monday, Feb 25, 2013 after announcing solid fourth-quarter results.
The closing price of the cola giant on Mar 22, 2013, was $78.64, representing a solid 1-year return of about 23.2% and year-to-date return of about 14.3%. Average volume of shares traded over the last three months stands at approximately 5158K.
The Telegraph of London reported last Friday that activist investor Nelson Peltz is fast building stakes in PepsiCo and Mondelez, possibly in pursuit of a large $170 billion merger of the consumer giants.
The exact amount of Peltz’s investment is undisclosed. As per the news daily, citing some unnamed source, it speculates that Peltz could have already spent close to $2 billion to buy major stakes in the food and beverage giants through his investment vehicle, Trian Fund Management.
The news daily conjectured that Peltz may push PepsiCo to either take over Mondelez or split up into 2 separate companies. Shares on PepsiCo and Mondelez jumped on the merger rumors.
Mondelez emerged from such a split last year when Kraft Foods, Inc was demerged into two separate companies, Mondelez and Kraft Foods Group (KRFT - Analyst Report). Kraft Foods Group consists of the North American grocery business of the old Kraft Foods while Mondelez handles the latter’s snack business, which includes brands like Cadbury and Toblerone chocolates and Oreo biscuits.
PepsiCo has, however, denied rumors and issued a statement stating that it is not interested in large acquisitions.
This speculation of a possible merger comes on the heels of a shocking merger announcement last month, that of ketchup maker, H.J. Heinz Company ( with Warren Buffet’s company, Berkshire Hathaway, Inc. and a private Brazilian investment firm, 3G Capital.