Insight - PepsiAmericas wants end to PepsiCo takeover saga
PepsiAmericas has suffered "natural disruption" in its business due to PepsiCo's proposed buyout of the bottler, Pohlad said in the group's second quarter earnings conference call today (28 July).
"PepsiAmercias believes it is time to bring any discussions to a conclusion," he said.
In April, PepsiAmericas and fellow bottler Pepsi Bottling Group rejected a joint US$6bn from parent firm PepsiCo, which valued them at $23 and $29.5 per share respectively. However, the offer remains on the table.
Pohlad declined to comment further when questioned by analysts on both the extent of the disruption caused and the state of the PepsiCo proposal.
Despite his comments, he denied that PepsiAmericas was becoming "impatient" over the saga. "There is a Pepsico proposal out there...This requires discussion and negotiations, it requires an outcome," he said.
Pepsi Bottling Group said in June that "the ball is in PepsiCo's court". Several analysts expect that PepsiCo will raise its offer, although the soft drinks giant has said it will "maintain a disciplined approach".
PepsiAmericas today raised its full-year earnings guidance, despite a drop in profits and net sales in the second quarter of 2009.
A rise in carbonated soft drinks sales was offset by "softness" in non-carbonated drinks, especially RTD tea, and declines in Central & Eastern Europe, the group said.
A 5% sales rise in the US for the quarter was due to "solid pricing" and cost management, said Pohlad in the conference call. Year-to-date volume sales for the US were flat against the prior year, after a strong performance from Mountain Dew offset a tougher period for bottled water and tea.
Group tea sales, which include the Lipton brand, have been hit by growth in private retail RTD tea. Energy drinks also declined in the quarter, excluding the contribution of the newly acquired Rockstar brand.
In Eastern Europe, Pohlad said that PepsiAmericas remains committed to expansion. "We still see great potential in Central and Eastern Europe. Beverage consmumption levels are at half those of US," he said, adding that all emerging markets are "prone to ups and downs".
PepsiAmericas chief financial officer Alex Ware said the firm would "accelerate increased marketplace spending" in the region in the second half of 2009, and particularly in Romania, where the bottler has completed a new production facility allowing it to produce more non-carbonated drinks - such as RTD tea.
Cost savings will also be a focus, however. Ware said the group plans to cut 30% of its workforce in Hungary, due to difficult economic conditions.
For the full-year, Ware said that the firm expects some impact on earnings from its deal with Cabcorp and that foreign exchange rates, although more favourable, will continue to be a "significant headwind". Group operating profits are expected to fall 4% for the year.
PepsiCo's new vice president of brand marketing for Gatorade, Andrea Fairchild, faces a tough challenge to revitalise the sport drink's image in 2010....
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