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Activist firm Elliott announced a $4 billion stake in food giant PepsiCo on Tuesday, agitating for a turnaround.

Why it matters: Pepsi could become both a seller and a buyer to reposition its portfolio.

Driving the news: Despite "100 years of exception performance," Pepsi's "strategic and financial challenges have recently led to poor operational results, sharp stock-price underperformance and a meaningfully discounted valuation," Elliott wrote in a letter to Pepsi's shareholders. 

Zoom in: Here's how they say they'll do it.

Franchise the company's bottling business, mirroring the move Coca-Cola made nearly a decade ago.

Sell off some of its flagging brands. The firm specifically cited the Starry brand, Sodastream, Cap'n Crunch, and Rice-a-Roni in a pitch deck.

Pursue "bolt-on" M&A. PepsiCo.'s portfolio doesn't currently do much for the protein and health-conscious consumer, for example.

Zoom out: PepsiCo. had begun making initial moves.

The company flipped Sierra Mist into Starry in 2023, and it's already planning to reintroduce its Lay's and Tostitos brands without artificial colors.

The company also just announced a new deal with Celsius that'll see PepsiCo offload its Rockstar Energy brand, which Pepsi paid nearly $4 billion for in 2020.

What they're saying: "We note Elliott Investment Management's disclosure of its presentation and will review its perspectives within the context of our strategy to drive sustainable growth," PepsiCo. wrote in a statement.

By the numbers: PepsiCo.'s stock spiked as high as $157.74 on the news, before closing the day at $150.28.

Elliott's pitch to break up Pepsi portfolio

If Elliott gets its way, PepsiCo could be both a seller and a buyer to reposition its portfolio.

Illustration of an hourglass filled up with soda, instead of sand, falling to the bottom. 

Activist firm Elliott announced a $4 billion stake in food giant PepsiCo on Tuesday, agitating for a turnaround.Why it matters: Pepsi could become both a seller and a buyer to reposition its portfolio.

Elliott's pitch to break up Pepsi portfolio

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