US: PepsiCo files lawsuit against Pepsi Bottling Group

By | 11 May 2009

PepsiCo has filed a lawsuit against one of its biggest bottlers, Pepsi Bottling Group, accusing board members of illegally setting up measures to block a PepsiCo takeover.

Independent directors on the Pepsi Bottling Group (PBG) board have adopted a so-called "poison pill" to protect the bottler from a hostile takeover by PepsiCo, but they did not notify any PepsiCo-affiliated board members of their plan or invite them to a meeting, PepsiCo said today (11 May).

Calling the move "invalid", PepsiCo said that it has filed a lawsuit in Delaware against PBG and certain of its directors.

The move signals that PepsiCo's proposal to make Pepsi Bottling Group a wholly owned subsidiary may turn ugly.

The soft drinks giant last month offered to pay a combined US$6bn for outstanding shares in PBG and PepsiAmericas. It owns 33% of PBG and 43% of PepsiAmericas and has offered to pay $29.5 and $23.27 per share to the groups respectively.

Both bottlers have rejected the plan, upon the advice of special committees of independent directors set up to consider the offer.

PepsiCo defended its offer for both bottlers as "full and fair" late last week.

Its lawsuit also alleges that PBG independent directors have sought to implement new executive payment terms and change company bylaws "in ways PepsiCo believes are detrimental to its rights as a shareholder".

Sectors: Soft drinks

Companies: PepsiCo, Pepsi Bottling, PepsiAmericas

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