Activist shareholder Nelson Peltz said on Wednesday he wants PepsiCo Inc to buy Mondelez International Inc for around $35 a share in a deal that would be worth $62.46 billion and create a snack food powerhouse selling everything from chocolate to chips.
Peltz said in a 59-page presentation published on Wednesday on Trian's website that PepsiCo was at a "strategic crossroads" and the status quo was "unsustainable". Peltz has played a role in some of the food industry's biggest deals.
Speaking on Wednesday at a conference that was broadcast on CNBC, Peltz said PepsiCo "doesn't love the deal". He also said he plans to meet with Mondelez Chief Executive Irene Rosenfeld in the coming weeks.
PepsiCo, maker of Frito-Lay snacks and Gatorade sports drink, has repeatedly said it sees no need for large-scale mergers.
Although Trian disagrees with PepsiCo's rationale, it said it understands that a company cannot be compelled to complete a transformational merger.
"We hope they will reconsider their position," Trian said in a statement.
If PepsiCo does not pursue that deal, it must separate its snacks business from its drinks business, Trian said.
A PepsiCo spokesman said the company is confident in its ability to deliver longterm shareholder value as an integrated food and beverage company.
PepsiCo has already said publicly that it was weighing structural options for its North American beverage business but does not plan to discuss it until early next year.
Mondelez "regularly engages in meaningful conversations with its shareholders and looks forward to meeting with Trian to learn about their perspectives in more detail," according to a spokesman.
Trian said the combination of PepsiCo and Mondelez would create substantial cost savings and would benefit both companies' shareholders. Trian estimates the merger could lead to an implied value of $175 per share for PepsiCo and $72 per share for Mondelez by the end of 2015.
Davenport & Co analyst Ann Gurkin said revenue would increase if Frito-Lay snacks were sold through Mondelez's international distribution network.
PepsiCo shares were up 1.5 percent at $85.24 on the New York Stock Exchange, while Mondelez shares rose 2.1 percent to $30.50 on the Nasdaq.
The news came after sources said that a timeframe agreed upon between PepsiCo and Peltz to privately address the activist investor's suggestions for improving shareholder returns may be closing.
