PepsiCo Inc. launched a $6 billion takeover bid for its two largest independent bottlers late Sunday, a major strategy shift that signals the company’s intention to overhaul how it makes and distributes its products to consumers.
The simultaneous offers for Pepsi Bottling Group Inc. and PepsiAmericas Inc. value each company’s shares at about 17% above their trading price Friday. PepsiCo is offering $29.50 in cash and stock for each share of Pepsi Bottling, valuing the company at about $6.4 billion. It is making a separate offer for PepsiAmericas, at $23.27 per share, that values that bottler at about $2.9 billion.
The simultaneous offers for Pepsi Bottling Group Inc. and PepsiAmericas Inc. value each company’s shares at about 17% above their trading price Friday. PepsiCo is offering $29.50 in cash and stock for each share of Pepsi Bottling, valuing the company at about $6.4 billion. It is making a separate offer for PepsiAmericas, at $23.27 per share, that values that bottler at about $2.9 billion.
Pepsi already owns one-third of Somers, N.Y.-based Pepsi Bottling and over two-fifths of Minneapolis-based PepsiAmericas. Pepsi said it intended its offers to be friendly, and had to reveal them publicly because of Securities and Exchange Commission rules. The bottlers will likely convene independent committees that do not include PepsiCo’s board representatives to evaluate the bids.
The offers show that even during a global recession, the world’s best-capitalized corporations still have the wherewithal to pursue mergers. Shareholders of the two bottlers will have to decide how hard to press for higher prices in the midst of a shaky stock market.
A decade ago, Pepsi sought to separate itself from its bottlers, figuring it would help the company focus on soft-drink growth while keeping bottling assets off its balance sheet. In an interview, Pepsi Chairman and Chief Executive Indra Nooyi said business conditions had changed significantly since then. Consumers are abandoning soft drinks for water, juice and other noncarbonated beverages. WSJ
A decade ago, Pepsi sought to separate itself from its bottlers, figuring it would help the company focus on soft-drink growth while keeping bottling assets off its balance sheet. In an interview, Pepsi Chairman and Chief Executive Indra Nooyi said business conditions had changed significantly since then. Consumers are abandoning soft drinks for water, juice and other noncarbonated beverages. WSJ