NEW YORK (AP) -- Billionaire activist investor Nelson Peltz is pledging to get more involved in Dr Pepper Snapple Group (DPS) to fine-tune its operations and boost the beverage company's stock price, even if it means nominating new directors to the board and taking other actions.
Peltz, through his Trian Fund Management L.P. investment firm in New York, disclosed that his entities collectively hold 18.2 million shares, or a 7.18% stake, in Dr Pepper, according to a Friday filing with the Securities and Exchange Commission.
Trian's stake includes 10.8 million shares, or 4.26% of Dr Pepper, represented by swaps. Trian entered into swaps with Merrill Lynch International from October 2007 to March 2008 at prices of $24.24 to $24.75. Some swaps expire next June, and the rest expire in 2010.
By the settlement date of the swaps -- either at expiration or earlier termination -- Trian must pay up if there is "negative price performance" compared to an agreed-upon benchmark and vice versa. Payment must be in cash and not company shares. The swap shares also carry no direct or indirect voting rights.Trian said that since Dr Pepper was spun off from Cadbury Schweppes Plc (CBY) and became publicly traded in May, total shareholder return has been negative 40.7%. In contrast, the S&P 500's beverages index was down 12.6%, and its consumer staples index fell 15.2%. On Friday, Dr Pepper closed at $16.96, up 21 cents, but down 44% from its 52-week high of $30. Trian said it has met with Dr Pepper's executives and board of directors to address its concerns. The investment group said Dr Pepper is seen by Wall Street more as a beverage bottler than a branded beverage company even if it owns its most important brands.