Eduardo,
Here is the info from the Pepsi web site (www.pepsico.com):
Cost Basis
PepsiCo shareholders should allocate 92.4068 percent of their PepsiCo stock basis immediately prior to the spin-off of their PepsiCo shares, and 7.5932 percent of their PepsiCo stock basis immediately prior to the spin-off to the TRICON shares received in the spin-off.
FWIW, I feel that when they spun Tricon off, they didn't value it highly enough, which is the basis for my "gut feel" that Tricon will at least double within 5 years or so. Pepsi pre-split up was made up of Beverages, Frito Lay, and the restaurants, and they basically made the judgement that the restaurants were worth less than a tenth of the whole (7.6 percent figure above). They made this judgement (I think) based on net profit instead of other possibilities such as Revenue, Cash Flow, etc. The restaurants were lower margin business than the others, so that hurt the valuation of the Tricon business.
There are 10 times fewer Tricon shares than there are Pepsi Co shares, so don't forget than when you compare the two companies now...
As long as Tricon can demonstrate they can pay off their large debt over time, then I think the stock will become popular. Their plan to franchise company owned stores should increase their profit margin, which is something analysts keep an eye on, so that could help the stock price as well.
In my opinion, this is a great stock to have for 5-10 years from now, but most people don't have that sort of long-term investment target, but aim for much shorter-term gains.
Disclaimer: I am a Tricon shareholder |
