PepsiCo will have to improve on its offer if it wants to fully acquire Pepsi Bottling Group, the bottler's board has said, defending its decision to reject a deal.

Commenting on the stand-off between the two companies, Pepsi Bottling Group (PBG)  chief financial officer Alfred Drewes said: "The ball is in PepsiCo's court."

His comments came during an analyst presentation today (2 June), following PBG's decision to raise its full-year earnings guidance for 2009 by US$0.1, to a range of $2.3 to $2.4.

Both PBG and fellow bottler PepsiAmericas have rejected a combined $6bn takeover bid from PepsiCo, valuing their shares at $29.5 and $23.27 respectively. 

Dewes told analysts that PepsiCo must improve its offer to secure a deal. "Independent shareholders own two third of PBG stock and 60% of the voting power.

"PepsiCo does not own enough shares to unilaterally raise PBG's board," he said, adding that any attempt to do so may "raise issues with Delaware law".    

Neither Dewes nor PBG CEO and chairman Eric Foss would comment on whether direct discussions have taken place with PepsiCo regarding the offer.

They dismissed as a "ridiculous theory" analyst suggestions that PepsiCo might look to squeeze the bottler's cash flow by increasing the price of juice concentrate.

PBG has repeatedly claimed that PepsiCo's bid "grossly" undervalues its business.

PepsiCo said that it expects to achieve $200m in annual cost savings by taking full control of the bottlers, but Drewes said today that PBG's own analysis suggests this figure is more likely to be $750m-$800m. PBG, rather than PepsiAmericas or PepsiCo, "is the critical party in achieving these synergies", he added.

Dewes defended PBG's estimate as "entirely reasonable", adding that investment broker Morgan Stanley had projected synergies of up to $1.2bn in its own analysis of a potential deal.

Even without these synergies, historical precedents indicate that PBG would be worth at least $30 per share, Dewes said.

Analyst Mark Swartzberg, of Stifel Nicolaus, said following PBG's raised earnings guidance today: "We think the move supports PBG's previously expressed view that PepsiCo's offer is "grossly inadequate". More to the point, we think it makes it tougher for PepsiCo to come to a deal without a significant premium to yesterday's closing for PBG (eg, 10%)."

PBG closed on the New York stock exchange yesterday at $33 per share.

PepsiCo said this afternoon that it is moving its senior vice president of investor relations to work on the takeover proposal.

A PepsiCo spokesperson declined to comment on the PBG conference when contacted by just-drinks this afternoon.