Hugh Johnston, chief financial officer (CFO) of PepsiCo, Inc. (NYSE:PEP) criticized the proposal of Nelson Peltz, founding partner of Trian Fund Management after the beverage maker posted strong financial results for the second quarter.

PepsiCo

PepsiCo, Inc. (NYSE:PEP) reported $1.28 earnings per share, an increase of 36 percent or $1.31 core EPS, an increase of 17 percent on organic revenue growth of 4.2 percent. The company generated $16.8 billion revenue, 2 percent higher than its $16.4 billion revenue in the same period a year earlier.

PepsiCo beat consensus expectations

PepsiCo, Inc. (NYSE:PEP) beat the consensus expectations of analysts with an EPS estimate of $1.19 and $16.79 billion revenue.

Peltz recommended for PepsiCo, Inc. (NYSE:PEP) to spin off its underperforming beverage business, and acquire Mondelez International Inc (NASDAQ:MDLZ). During the CNBC-Institutional Investor Delivering Alpha Conference, Peltz explained that consumers are turning away from soft drinks. The underperformance of its beverage unit is overshadowing its snacks business segment. As of March 31, Trian Fund Management owns 12 million shares of Pepsi and 40 million shares of Mondelez.

During an interview with CNBC’s Squawk Box, Johnston said, “You’ll hear people occasionally advocate for that type of transaction. The thing that they really need to look at is what’s their percentage holdings of Mondelez International Inc (NASDAQ:MDLZ) and what’s their percentage holdings of PepsiCo.”

In addition, Johnston argued that PepsiCo, Inc. (NYSE:PEP) is doing better at present and the proposed merger will only harm its business. He said, “PepsiCo as a portfolio is working so well right now. The complexity of taking on an $80 billion acquisition, and somehow trying to do all of that integration, frankly will distract the business from doing what it is that we’re doing right now, which is creating a lot of value for shareholders.”

Alex Khutorsky, managing director of The Valence Group, an M&A advisory investment bank noted, “Peltz is using traditional activist ploys to push together two unwilling merger partners.  An M&A deal is hard enough to execute when both parties are interested in a transaction.  Hostile deals are notoriously difficult precisely because there is only one willing party to the transaction.  In this case, Peltz actually has two unwilling parties, which is definitely not your every day activism.”

The strong financial performance of PepsiCo, Inc. (NYSE:PEP) was driven by the good sales performance of Frito Lay with mid-single digit revenue organic growth in North America, and double-digit revenue organic growth in Latin America.

PepsiCo affected by weather

According to Johnston, PepsiCo, Inc. (NYSE:PEP)’s business is affected by weather. He explained, “When it’s hot out, Gatorade sells. When it’s cold out, Quaker sells better. When it’s a great summer, there’s a lot of parties, Frito Lay tends to do really well. When it’s cold and flu season, Tropicana does well.”

Last week, Larry Fink, chief executive officer of BlackRock, Inc. (NYSE:BLK) rejected Peltz’ proposal for PepsiCo, Inc. (NYSE:PEP) during an interview with CNBC. According to him, “At the moment, I would disagree with him. I question how it would add long-term value.” BlackRock owns 5 percent stake in the beverage maker.

The stock price of PepsiCo, Inc. (NYSE:PEP) is slightly down at $86.06 per share around 11:55 A.M. in New York Trading, on Wednesday.