Pepsi back in bottling business with $7.8-billion deal

PepsiCo is back in the bottling business after hiking its original acquisition offer by $1.8 billion for two of its bottlers to $7.8 billion to create one of the world's largest food and beverage company.

Indra Nooyi, chief executive officer, announced yesterday that Pepsi has agreed to buy two of its biggest bottlers, Pepsi Bottling Group and PepsiAmericas in deals worth a total of $7.8 billion.

New York-based PepsiCo will pay Pepsi Bottling Group (PBG), the biggest independent bottler of Pepsi products, $36.50 a share, up from its earlier offer of $29.50 per share and pay PepsiAmericas (PAS) $28.50 a share, up from $23.27 per share. Pepsi already owns 33.1 per cent of PBG stock and 43 per cent of PAS.

In April, the world's second largest soft-drink maker had made an offer to acquire all the outstanding shares of common stock it does not already own in PGB and PAS for about $6 billion. (See: Pepsi offers to buy out its two bottlers for about $6 billion)

The offer had valued PBS for $4.2-billion and PAS for about $2.8 billion.

With annual sales turnover of nearly $14 billion, the PBG board, in a move widely interpreted as posturing to get a better deal for its shareholders, rejected Pepsi's $4.2-billion cash-and-stock takeover proposal in May, citing the bid was 'grossly inadequate since Pepsi's proposal was made just prior to the public release of PBG's strong first quarter 2009 earnings released on 22 April. (See: Pepsi Bottling Group says Pepsi's $4.2 billion takeover proposal has no fizz)