PepsiCo Inc (NASDAQ:PEP, XETRA:PEP) said on Tuesday it reached an agreement with activist investor Elliott Management to cut costs and streamline its product lineup, avoiding a protracted proxy battle after the hedge fund built a roughly $4 billion stake in the company.
The maker of Pepsi-Cola, Lay’s and Doritos said it will reduce expenses across its food and beverage operations and trim the number of individual products it sells in the US by about 20% next year.
The move is aimed at reviving its slowing snacks division, where PepsiCo will also lower prices on parts of its food portfolio.
The agreement does not include board seats for Elliott, which had urged the company to reinvigorate its soft drink business and improve returns.
Pepsi CEO Ramon Laguarta said the talks with Elliott were “constructive and collaborative,” adding that the portfolio changes target underperforming items to cut complexity and sharpen focus on top-selling products.
“PepsiCo Foods North America will play a critical role towards achieving these targets and we feel encouraged about the actions and initiatives we are implementing with urgency to improve both marketplace and financial performance,” Laguarta said.
PepsiCo has faced pressure as consumers pare back spending on packaged foods. The company has been expanding its sugar-free beverage lineup, adding healthier options and recently revamping its Lay’s brand.
The cost cuts and product reductions are expected to support an acceleration in growth. PepsiCo forecast full-year organic revenue growth of 2% to 4% in 2026, with growth at the high end of that range in the second half of the year. It expects acquisitions and currency to lift net revenue by 4% to 6% in fiscal 2026, and projected core earnings per share to rise about 5% to 7%.
UBS analysts called the announcement a “positive” step for investors, noting the company reaffirmed 2025 guidance and offered a 2026 outlook that points to improved growth and margin recovery.
The agreement, which sidesteps a drawn-out activist fight, commits PepsiCo to companywide cost savings, operational efficiencies and more targeted pricing, including greater emphasis on affordable price tiers and innovation focused on “permissible and functional” ingredients, according to UBS.
PepsiCo said it sees a path to at least 100 basis points of operating margin expansion over the next three years, supported by reinvestment in advertising, marketing and consumer value.
The company also guided to a core effective tax rate of about 22% in 2026 and free cash flow conversion of at least 80%.