Blog: Tingyi shares soar on PepsiCo China deal
Michelle Russell | 7 November 2011
Shares in Tingyi Holding Corp rallied in early trading today (7 November) following the firm's announcement of its deal with PepsiCo on Friday.
Tingyi has purchased PepsiCo's entire China bottling operations in exchange for a 9.5% interest in its drinks business. Before the announcement, Tingyi had suspended trading on the Hong Kong Stock Exchange on Friday, pending the "price sensitive transaction".
Tingyi's Hong Kong-listed shares opened 8.2% higher at HK$22.50 upon resuming trading today. At 1138 GMT, Tingyi was up 9.4% at HK$22.75, while Hong Kong's benchmark Hang Seng Index was up 0.3%.
While the deal will help PepsiCo expand its market share in China, it could also help Tingyi enlarge its product mix - Tingyi sells only diluted fruit juice products and has little exposure to the pure fruit juice sector.
The tie-up is one of only a few in which a Chinese company has acquired a foreign stake within its own borders and not the other way around.
Tingyi may have its hands full however; in 2010, PepsiCo's bottling operations recorded a combined loss of $175.6m, amid rising labour and raw material costs.
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