PepsiCo receives regulatory approval to acquire remaining 57% stake in PepsiAmericas

Update on October 27, 2009:

PepsiCo, Inc., a snack, beverage, and food company, has received clearance from the European Commission to acquire the remaining 57% stake in PepsiAmericas, Inc. Both the companies are based in the US.

PepsiAmericas is a producer, seller, and distributor of carbonated and non-carbonated beverages.

Announcement (August 4, 2009):

PepsiCo has entered into definitive merger agreement to acquire the remaining 57% stake in PepsiAmericas.

Under the terms of the agreement, PepsiAmericas shareholders will have the option to elect either $28.50 in cash or 0.5022 shares of PepsiCo common stock for each share of PepsiAmericas, subject to proration such that the aggregate consideration to be paid to PepsiAmericas shareholders shall be 50% cash and 50% PepsiCo common stock.

PepsiCo currently holds a 43% stake in PepsiAmericas. Based on the offer price, the remaining 57% stake in PepsiAmericas is valued at approximately $1,967.27 million.

Simultaneously, PepsiCo has also entered into definitive merger agreement to acquire the remaining 67.4% stake in The Pepsi Bottling Group, Inc. The total value of the shares that PepsiCo will be acquiring is both the companies is about $7,800 million.

As part of the transaction, Bank of America Corporation and Citigroup, Inc. have provided debt financing commitments to PepsiCo.

Centerview Partners and Bank of America Corporation (Bank of America Merrill Lynch) are acting as lead financial advisors to PepsiCo. Citigroup is also acting as financial advisor, while Davis Polk & Wardwell LLP is acting as legal counsel and Brunswick Group LLP is acting as PR advisor to PepsiCo. Goldman Sachs is acting as financial advisor, while Sullivan & Cromwell and Briggs and Morgan are acting as legal counsel to PepsiAmericas on this transaction.

The transaction is expected to close in late 2009 or early 2010.

Deal Value (US$ Million) 1967.27
Deal Type                Acquisition
Sub-Category             Majority Acquisition
Deal Status              Announced: 2009-08-04

Deal Participants

Target (Company)   PepsiAmericas, Inc.
Acquirer (Company) PepsiCo, Inc.

Deal Rationale

The acquisition would result in a stronger food and beverage company. The transaction would enable PepsiCo to bring innovative products and packages to market faster, streamline its manufacturing and distribution systems, and allow it to react more quickly to changes in the marketplace and position it to compete and to grow. Further, the transaction would consolidate 80% of the North American beverage volume, enhance customer service, eliminate redundant costs to leverage scale efficiencies, and provide flexibility in deploying multiple go-to-market systems to tailor distribution by channel. Additionally, the consolidation of manufacturing networks would provide cost benefits and also optimize investments in growth and innovation. The transaction is expected to be accretive to PepsiCo's earnings by about $0.15 per share when synergies are fully realized in 2012. The transaction is expected to create annual pre-tax synergies of $300 million by 2012 largely due to greater cost efficiency and also improved revenue opportunities.

% Acquisition 57%

Related terms: acquisition, advisor, bank, beverages, debt, distributor, earnings, food, legal, manufacturing, market, merger, products, revenue