PepsiCo More Likely Choice for 3G/Kraft Than Coca-Cola: RBC
PepsiCo viewed as more likely an acquisition target for 3G/Kraft than Coca-Cola, writes RBC Capital Markets analyst Nik Modi in note.
- KO’s refranchising efforts prohibits 3G from controling entire cost structure of KO system (limiting ability to cut costs), while PEP owns most of its bottling assets
- 3G’s path to value creation is much easier with PEP: separate Frito-Lay and Beverages, maybe merging with KHC followed by further cost cuts at Pepsi Beverages and M&A
- Views Edgewell as most likely takeover target in household & personal care space, with Unilever as most likely acquirer
- UN’s focus, scale in emerging markets, which it can leverage to expand the business to new markets
- EPC’s sun care brands would also be highly incremental to UN’s personal care portfolio
- UN mgmt comments following Dollar Shave Club acquisition in July reaffirm UN’s potential interest
- Other EPC suitors may include Beiersdorf, Henkel, Colgate, Johnson & Johnson, Kimberly-Clark, Church & Dwight, L’Oreal/Kao
- Acquisition of CL, KMB, CLX, or CHD “is a lower probability
event”