PURCHASE, NY -- PepsiCo has entered into definitive agreements to buy its two largest bottlers. The drink and snack giant has agreed to acquire all of the outstanding shares of common stock it does not own in The Pepsi Bottling Group Inc. (Somers, NY) and PepsiAmericas Inc. (Minneapolis), valued at approximately $7.8 billion.
PepsiCo will pay PBG shareholders $36.50 a share in either cash or stock and PepsiAmericas shareholders $28.50 a share. The purchase price is higher than the $29.50 and $23.27 per share, respectively, that PepsiCo had offered in April and the bottlers rejected.
PepsiCo spun off PBG and PepsiAmericas as separate companies in 1999. By buying them back, it will consolidate 80% of its North American beverage volume. This will speed decision-making, allow the company to bring new products to market faster, streamline its manufacturing and distribution systems, and bundle its food and beverage offerings, according to officials. PepsiCo anticipates that the efficiencies achieved by integrating the beverage businesses will save the combined entity $300 million in annual costs by 2012.
"While the existing model has served the system very well, it is clear that the changing dynamics of the North American liquid refreshment beverage business demand that we create a more flexible, efficient and competitive system that can drive growth across the full range of PepsiCo beverage brands," said PepsiCo chief executive Indra Nooyi.
The acquisitions, expected to close late this year or early in 2010, are subject to regulatory approvals and approval by stockholders of both bottling companies.