PepsiCo offers $6 billion to buy out other shareholders

Bloomberg

PepsiCo is offering the equivalent of $29.50 for stock it doesn’t already own in its biggest bottler, Pepsi Bottling Group, and $23.27 for PepsiAmericas shares. The offers are 17 percent higher than the bottlers’ closing prices on April 17, PepsiCo said in a statement distributed yesterday by PR Newswire.

Buying the bottlers may boost earnings by 15 cents a share and create annual pre-tax savings of more than $200 million. The transactions will give the maker of Pepsi, Gatorade and Tropicana full control over about 80 percent of its North American beverage volume, the New York-based company said in its statement.

More flexibility
The acquisitions will let PepsiCo "unlock significant cost synergies, improve the speed of decision making and increase our strategic flexibility," Chairman and Chief Executive Officer Indra Nooyi said in the statement.

PepsiCo and rival Coca-Cola sell beverage concentrate and syrup to licensed bottlers who add water and other ingredients, put the mixture in bottles and cans, and sell it.

"Our operating environment has evolved dramatically in the last decade," Nooyi said. "By reshaping our business model we can significantly improve our competitiveness and growth prospects."

First-quarter earnings per share for PepsiCo rose to 72 cents from 70 cents a year earlier. The company reaffirmed full-year guidance of mid- to high-single-digit constant-currency net sales and core earnings per share growth in a separate statement yesterday.

The proposed acquisitions will streamline PepsiCo’s manufacturing and distribution and shorten the time it takes to produce and market new products, the company said.

PepsiCo owns 33 percent of Pepsi Bottling and 43 percent of PepsiAmericas, according to data compiled by Bloomberg.