1 Under-the-Radar Deal That Could Send Pepsi Stock Soaring
PepsiCo stock is already up more than 22% on the year. However, a potential merger between Mondelez International and Pepsi could send Pepsi stock into the stratosphere. As the world's largest snack-food company, Pepsi is finding new growth opportunities in emerging markets where snack-food consumption is just starting to take hold. Pepsi's strong position in the global snacks business has led to speculation that the company could make a bid for Mondelez.
As you may remember, Kraft Foods spun off its North American grocery business last year and changed its name to Mondelez International. With billion-dollar brands under its belt including Oreo and Cadbury chocolate, joining forces with Pepsi could put both companies on the fast track to growth in emerging markets, such as China and India.
Sweet and salty speculation
A possible merger between the two snack giants is still speculative. Nevertheless, analysts at Morningstar are optimistic about a future deal. In fact, "a combined Pepsi-Mondelez could generate roughly $1.8 billion per year in synergies," according to Thomas Mullarkey. He goes on to say that if a deal were to happen, Pepsi stock could be worth as much as $94 a share. Today the stock trades around $83 a pop.
With the cost of debt at such attractive rates today, purchasing Mondelez could be a big win for Pepsi down the road. Moreover, Pepsi already controls nearly 40% of the global snack market. Together with Mondelez, Pepsi could set the stage for world domination.
PepsiCo has quenched consumers' thirst for more than a century. But recently, the company has left shareholders craving more. With increased competition and loss of market share, many investors wonder if this global snack food and beverage giant is simply fizzling out. Are more bland results ahead for PepsiCo? The Motley Fool's premium report on the company guides you through everything you need to know about PepsiCo, including the key opportunities and threats facing the company's future. Simply click here now to claim your copy today.
The article 1 Under-the-Radar Deal That Could Send Pepsi Stock Soaring originally appeared on Fool.com.Fool contributor Tamara Rutter has no position in any stocks mentioned. The Motley Fool recommends and owns shares of PepsiCo. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.