Activist hedge fund firm Elliott Investment Management’s proposal to spin-off PepsiCo's global bottling operations as part of its plan to increase shareholder value, could face opposition from other investors in the business, according to a report by Reuters.

Elliot, which holds a $4bn stake in PepsiCo has proposed a raft of initiatives including cutting costs and divesting smaller brands. While some shareholders back the activist's call to streamline the portfolio — including a potential sale of Quaker Oats for around $6bn — others appear more cautious about a bottling spin-out, warning that re-franchising could take years, depress margins, and weigh on earnings before benefits materialise.

Rival Coca-Cola faced similar short-term setbacks when it undertook a five-year bottler divestiture in 2017.

Elliott argues that PepsiCo’s North American beverage margins trail Coca-Cola’s by up to 10 percentage points and that re-franchising could close the gap. Two PepsiCo franchisees also back the idea, saying independent bottlers often provide stronger service to retailers.

PepsiCo’s shares initially rose 6% when Elliott disclosed its position in early September, but the stock has since given up those gains and is down more than 10% over the month. Investors say Elliott has so far avoided open criticism of PepsiCo’s board or CEO Ramon Laguarta, but note the activist is known for ramping up pressure if management resists change.