Will PepsiCo, Inc. (PEP) Merge With Mondelez International Inc (MDLZ)?

Foolish takeaway

Ultimately, Peltz will have to sway major PepsiCo, Inc. (NYSE:PEP) stakeholders like BlackRock who aren’t yet sold on the idea in order to force a merger. That doesn’t mean that these institutional investors — 95% of Pepsi’s outstanding shares are owned by only 741 institutional entities – can’t be persuaded to approve a Pepsi/Mondalez merger in some form. 37 of the top 40 Pepsi shareholders also own significant stakes in Mondelez International Inc (NASDAQ:MDLZ).

The problem is that Peltz’ proposal doesn’t unlock enough value for the world’s largest money manager to risk alienating its fellow board members. Mondelez International Inc (NASDAQ:MDLZ) also derives 39% of its sales from Europe at present. While that dependence may turn into a net positive once Europe recovers, at the moment its the biggest drawback to Peltz’ merger proposal, and one that’s likely to send him back to the drawing board. In this Fool’s opinion, investors would be better served by selling the rumor than by buying into it — at least, at this stage of the game.

The article Will PepsiCo Merge With Mondelez? originally appeared on Fool.com.

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