The following is the text of a letter sent from Ian Cook, Presiding Director of the Board of Directors of PepsiCo, to Trian Partners on February 27, 2014:
Dear Mr. Peltz:
Your letter of February 19, 2014 has been received and shared with the entire PepsiCo board and its management. I am writing to advise you that the board and management are comfortable and in complete alignment in rejecting your proposal.
The board has been closely involved in evaluating the arguments that you presented in your earlier white paper, many of which were repeated in your recent correspondence. After initially proposing a spin-off of the snacks business and a merger of it with Mondelez, you have now indicated that your primary suggestion at this point is for PepsiCo to separate its global snacks and beverage businesses. We have carefully studied management’s extensive analysis of the current company structure and its beverage business and management’s conclusions that much of Trian’s data is selective and, in many instances, misused. Our board and management team are confident in the thoroughness of this analysis and in the conclusion that PepsiCo’s value is maximized as an integrated food and beverage company. We trust that you appreciate the seriousness with which we have examined your observations and proposal and the firmness with which we reject the proposal to separate the businesses. In short, the board and management have concluded that the financial engineering you propose erodes value for shareholders rather than creates value.
We welcome our shareholders’ suggestions for enhancing value. However, after fully considering and rejecting your proposals, the board and management have turned their attention to running the integrated company for the benefit of all shareholders and delivering the financial commitments projected.
We thank you for your interest in PepsiCo.
/s/ Ian Cook