Elliott Management acquired a $4 billion stake in PepsiCo and stated the company is at a critical inflection point, estimating the stock could rise more than 50% with recommended changes. Elliott now manages roughly $76 billion and operates as a large, institutional activist. Activist campaigns increasingly produce negotiated, strategic adjustments rather than public, high-drama fights. The growth of corporate defense teams at investment banks and regulatory changes have reduced overt confrontations. Anticipated outcomes include cost reductions and divestitures, while extreme measures like forcing a CEO to resign have become less common as markets and boards often align with activist proposals.
In a different era, when Elliott was less institutional and managed less than half the $76 billion in assets it boasts today, a letter like this would send chills down the spine of Pepsi CEO Ramon Laguarta. Now, thanks to the growing scale of activists, the growth of corporate defense teams at investment banks, and regulatory tweaks, a campaign from a feared investor is closer to a McKinsey review than a corporate espionage-filled battle.
Yes, there'll be costs that will be cut or units to be sold, but the old-school activist tactics such as pressuring the CEO to step down, which earned Singer the title " doomsday investor" from the New Yorker in 2018, are not go-to moves. That's in part because activists no longer need to demonstrate their power to board members and executives.
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