US: PepsiCo seals bottlers deal
Deal "changes the game" - PepsiCo CEO Nooyi
PepsiCo has completed the acquisition of its two major bottlers, Pepsi Bottling Group and PepsiAmericas, after clearing the final regulatory hurdle.
Early approval from the US Federal Trade Commission (FTC) will enable PepsiCo to close the US$7.8bn deal by the end of today (26 February), the soft drinks giant said this morning.
PepsiCo's announcement comes less than 24 hours after rival The Coca-Cola Co said that it would take full control of its own major bottler's operations in North America.
As part of the FTC approval, PepsiCo has committed to respecting confidentiality on Dr Pepper Snapple Group drinks that the new PepsiCo entity will produce and distribute, following the bottlers deal.
Both bottlers agreed to the move after PepsiCo raised its offer price to US$36.5 and $28.5 per outstanding share in PBG and PepsiAmericas respectively.
The group, which already owns 33% of PBG and 43% of PepsiAmericas, originally offered $29.5 and $23 per share respectively.
PepsiCo CEO Indra Nooyi said in the firm's recent full-year results announcement that the bottlers deal "changes the rules of the game in North America beverages".
After initially pinpointing $300m in annual pre-tax synergies, PepsiCo last week raised this to $400m by 2012. Between $125m and $150m of savings are set to be realised in 2010, although it expects a $400m one-off charge on the deal, it said.
"The company is still in the process of completing its integration planning. The details of these and other efficiencies relating to the company’s beverage business will be discussed at its analyst meeting scheduled for 22 and 23 March 2010," it said.
To view more just-drinks analysis on the deal, click here.
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