1 Under-the-Radar Deal That Could Send Pepsi Stock Soaring

PepsiCo (NYSE: PEP  ) stock is already up more than 22% on the year. However, a potential merger between Mondelez International (NASDAQ: MDLZ  ) 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 (NASDAQ: KRFT  ) 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.

Read/Post Comments (0) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2419243, ~/Articles/ArticleHandler.aspx, 3/29/2015 8:02:53 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!