Pepsi-Gemex, S.A. de C.V. (NYSE:GEM), the second-largest Pepsi bottler outside the United States and the largest bottler for Pepsi-Cola in Mexico, announced that it successfully closed its tender offer for the Pepsi bottler, Embotelladores del Valle de Anahuac, S.A. de C.V. (EMVASA).

The all-cash tender offer was closed Wednesday, September 6, 2000, with 96.9% of EMVASA shares having been tendered.

The board of directors of both companies have approved the acquisition of EMVASA which has become a subsidiary of Pepsi-Gemex. In addition, as announced earlier, all Mexican governmental agencies have approved the transaction.

EMVASA operates four soft drink plants in five regions of Mexico--Izcalli, Toluca, Leon-Irapuato, Queretaro, and Tampico-Victoria. In 1999, it sold 15%, or almost 70 million cases, of all PepsiCo products sold in the country.

"The acquisition", said Enrique C. Molina S., chairman of the Pepsi-Gemex board, "was well-negotiated at US$1.44 per case and will make Pepsi-Gemex a larger, stronger and more competitive bottler in one of PepsiCo's largest international markets." He added, "It's fully in line with our mutual goal of building strength through consolidation of Pepsi operations nationwide, while becoming the low cost producer."

In addition, he said, "Perhaps the most valuable opportunity afforded Pepsi-Gemex is to consolidate operations in Mexico City and the Valley of Mexico. As most of EMVASA's territories are adjacent to our operations, this acquisition is expected to allow us to realize cost savings derived from the consolidation of operations--from our vertical integration in packaging, our modern plants and high speed production lines. It also allows us to provide a consistent approach in the highly competitive Mexico City market in terms of promotion, packaging, pricing and our general approach to the consumer."

Financing for the acquisition was provided by a syndicate of banks, led by Banco Bilbao Vizcaya A-Bancomer. Due to the high lender interest in participating in the syndicate, the original credit commitment of US$100 million was increased to US$150 million. As a result Pepsi-Gemex was able to use the additional funding to retire more expensive EMVASA and Pepsi-Gemex indebtedness, after paying out Ps.724,930,266 or approximately US$78 million for 120,940,636 EMVASA shares. PepsiCo and Pepsi-Gemex also reached an agreement to exchange PepsiCo's remaining interests in EMPECSA (18%), the primary bottling subsidiary of EMVASA, and in Pepsi Gemex's Northeast Bottling Group (50%) for shares of Pepsi Gemex having a value of approximately US$35 million. The number of Pepsi Gemex shares to be issued will be determined by the market price of Pepsi-Gemex shares prior to year-end.

Pepsi-Gemex's current operations encompass the Mexico City metropolitan area, and portions of the adjacent states of Mexico and Hidalgo, the southwestern states of Guerrero and Morelos, the southeastern states of Campeche, Yucatan and Quintana Roo and the central states of Aguascalientes, Zacatecas, Durango and San Luis Potosi. Since mid-1997, Pepsi-Gemex has had control of the Northeast Bottling Group, which holds the Pepsi franchise for Nuevo Leon, Coahuila and portions of the states of Chihuahua, Tamaulipas and Durango. Since January 1999, the financial results of the Northeast Bottling Group have been consolidated into those of Pepsi-Gemex.

Pepsi-Gemex is one of Mexico's largest soft drink producers. The Company produces Pepsi, Mirinda, KAS, Seven-Up, Manzanita Sol, Power Punch, Garci Crespo and San Lorenzo mineral waters and Squirt. The Company also offers Seagram products to its customers and owns Mexico's largest purified water company, Electropura. Pepsi-Gemex shares trade on the Mexican Bolsa and the New York Stock Exchange.