Peltz Joins Mondelez Board
Ends push for candy, snack company to pursue PepsiCo merger
Published in CSP Daily News
DEERFIELD, Ill. -- Mondelez International Inc. has added "activist investor" Nelson Peltz, CEO and founding partner of Trian Fund Management LP, to its board of directors. Peltz is no longer pushing for PepsiCo Inc. to buy Mondelez and create a global snack foods giant, according to the Associated Press.
Peltz had criticized the company's performance since it split from Kraft Foods in October of 2012. In a white paper issued last summer, Trian laid out various scenarios it wanted PepsiCo Inc. to pursue. "Alternative A" proposed that PepsiCo spin off its beverage unit and merge its Frito-Lay snacks business with Mondelez. "Alternative B" focused on PepsiCo splitting up its beverage and snacks business.
"Given that Pepsi's not interested in Plan A, we are encouraging them to pursue Plan B," said Anne Tarbell, a spokesperson for Trian.
PepsiCo CEO Indra Nooyi has rebuffed the suggestion in the past, repeatedly stressing the value of a combined snack and beverage company.
In a note to investors cited by AP, JPMorgan analyst Ken Goldman said he thinks Mondelez added Peltz to its board to avoid a proxy fight. He said Mondelez CEO Irene Rosenfeld handled the situation well; given the company's disappointing performance, she and other directors theoretically could have been "voted off the island" after a proxy fight.
"On the other hand, many investors with whom we have spoken in recent months hoped Trian and its associates would command more than one seat," Goldman wrote.
"As one of the company's largest shareholders, with a current beneficial ownership of more than 46 million shares, Trian has long seen enormous opportunities in the company's portfolio of strong global brands," said Peltz. "Irene Rosenfeld is a CEO who has created substantial value for shareholders over the course of her career. I look forward to working closely and constructively with Irene, the Board and management team toward our shared goals of driving growth, improving margins and increasing value for all shareholders."
"We believe that Nelson will be a valuable addition to our board," said Rosenfeld. "We respect his more than 40 years of business and investment experience as well as his expertise helping consumer products companies leverage their brands and improve operating and financial performance. We welcome his input as we deliver superior shareholder returns."
Peltz co-founded Trian in 2005. From 1993 to 2007, he served as chairman and CEO of Triarc Cos. Inc., which then owned the Snapple Beverage Group, which was sold to Cadbury Schweppes Plc and Arby's Restaurant Group Inc., which was sold to a private-equity firm, as well as other consumer and industrial businesses. From 1983 until 1988, Peltz was chairman and CEO of Triangle Industries Inc., following the acquisition of American Can Co.'s packaging business and the formation of American National Can Co. until Triangle was acquired by Pechiney SA. From 2003 to 2006, Peltz served as a director of Encore Capital Group Inc., a provider of debt management and recovery solutions. From 1996 to 1999, he was chairman of National Propane Corp., the managing general partner of National Propane Partners LP, which was sold to the Columbia Energy Group. From 1984 until 1992, he was chairman and CEO and a director of Avery Inc. which, from 1986 to 1989, was engaged in the manufacture and sale of specialty chemicals through Uniroyal Chemical, which was sold in a management buyout.
He began his business career in 1963 when he joined his family food business.
Peltz currently serves as non-executive chairman of The Wendy's Co., the second-largest quick-service restaurant (QSR) company in the United States. He also serves as a director of Legg Mason Inc., an asset management firm, and chair of its Nominating & Corporate Governance Committee. In addition, Peltz is on the board of directors of Ingersoll-Rand Plc, a global diversified industrial company. He previously served as a director of H.J. Heinz Co., a global packaged food manufacturer, until it was sold to Berkshire Hathaway and 3G Capital.
Trian seeks to invest in high-quality but undervalued and under-performing public companies and to work constructively with the management and boards of those companies to significantly enhance shareholder value for all shareholders through a combination of improved operational execution, strategic redirection, more efficient capital allocation and increased focus.
With the addition of Peltz, the Mondelez board expands to 12 members, 11 of whom are independent and all of whom are elected annually. Peltz will also be included in the company's slate of nominees for election to the board at the 2014 Annual Meeting of Shareholders.
Deerfield, Ill.-based Mondelez is a global snacking powerhouse, with 2012 revenue of $35 billion. It is a leader in chocolate, biscuits, gum, candy, coffee and powdered beverages, with billion-dollar brands such as Cadbury, Cadbury Dairy Milk and Milka chocolate, Jacobs coffee, LU, Nabisco and Oreo biscuits, Tang powdered beverages and Trident gum.