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PepsiCo Would Be Better Off Selling Its Quaker Foods Unit

5/05/15 4:38 PM EDT
PepsiCo would be better off selling its Quaker Foods North America unit and using the proceeds to bolster parts of the business where the company has scale and can have a more meaningful impact on financials, writes The Deal’s Richard Collings. The Quaker division -- which generates 4% of PepsiCo's revenues -- includes the Quaker oatmeal and granola bars, as well as non-Quaker branded products such as Aunt Jemima mixes and syrups, Rice-A-Roni side dishes and Cap'n Crunch and Life cereals. For its most recent fiscal year, the division posted $621 million in operating profit, a slight increase compared to the $617 million for the same period a year prior, but a decline from the $695 million generated in 2012. Richard writes that in lieu of a sale of the entire Quaker division, PepsiCo could at the minimum sell Aunt Jemima and Rice-A-Roni. It could then find a partner -- Post Holdings, perhaps -- giving it the license to sell Quaker-branded cereals and the Life and Cap'n Crunch brands. Proceeds from a divestiture could go towards acquisitions. PepsiCo could have its own line of milk and plant-based beverages if it were to acquire WhiteWave Foods Co. Such a move would position PepsiCo in the rapidly growing areas of natural and organic foods, as well as plant-based beverages including almond milk, writes Richard.
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