Activist investor William Ackman’s hedge fund company, Pershing Square Capital Management LP has recently acquired 7.5% equity stake in Mondelez International Inc. MDLZ, maker of the popular Oreo cookies, which is equivalent to $5.5 billion worth of stock.
With his latest investment in Mondelez, Ackman is reportedly insisting the snack company to accelerate its revenue growth and cut costs significantly or sell itself to a rival, like Kraft Foods.
In July, Kraft Foods was acquired by privately owned ketchup maker, H.J. Heinz Company, to form The Kraft Heinz Company KHC, the third largest food and beverage company in North America. Heinz was jointly owned by 3G Capital and Buffet’s Berkshire Hathaway, Inc. BRK.B. Kraft has been struggling with its top line ever since it split from Mondelez International in 2012 due to broader macro pressures. Kraft Heinz owns eight billion dollar brands and is expected to garner approximately $28 billion in revenues.
Mondelez’s interactions with activist investors are not exactly new. Earlier in Jan 2014, activist investor, Nelson Peltz, had joined its board of directors.
Peltz is known to have insisted PepsiCo, Inc. PEP to take over Mondelez and then spin off its underperforming beverage business. Peltz’s investment company, Trian Fund Management, holds major stakes in both the food companies. He felt that Pepsi’s underperforming beverage business was overshadowing its fast growing snack unit and urged the company to divest its Frito Lay in case it did not favor the Mondelez merger.
However, after joining the board of directors of Mondelez, media reports said that Peltz will not pursue his agenda of merging Mondelez with food and beverage giant, PepsiCo.
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