PepsiCo Inc said its board again rejected activist investor Nelson Peltz's renewed call to split the company's beverage business from its flourishing snacks division.
Ian Cook, presiding director of the company's board, in a letter to Peltz on Thursday said the board and management were "comfortable" and in "complete alignment" in rejecting his proposal.
Cook said PepsiCo had analyzed the company's current structure and its beverage business and concluded that it was better off as a combined food and beverage company.
"In short, the board and management have concluded that the financial engineering you (Peltz) propose erodes value for shareholders rather than creates value," Cook wrote in the letter sent to Trian Fund Management, Peltz's investment fund.
PepsiCo's response comes a week after Peltz sent a 37-page letter to its board urging them to create "two leaner and more entrepreneurial companies" by spinning off the floundering beverage business and focusing on its fast-growing billion-dollar snack business, which owns brands such as Doritos, Cheetos and Lays.
Peltz had said a spin-off would boost sales and margins in the snacks business, while the drinks business would generate stable flow of cash that could be returned to shareholders.
Trian owned about $1.2 billion of Pepsico stock, as of last week.
Peltz, in an interview with CNBC earlier in the day, said he would take the issue to every major Pepsi shareholder in the coming weeks to garner support.
PepsiCo shares were up slightly in post-market trading after closing at $79.07 on the New York Stock Exchange on Thursday.
