PepsiCo swaps 24 China bottlers for stake in Tingyi Asahi Beverages

Tingyi-Asahi Beverages Holding Co today agreed to buy US-based beverage giant PepsiCo's 24 bottlers in China, and in return give PepsiCo a 5-per cent stake in Tingyi-Asahi Beverages with an option to increase it to as much as 49 per cent.

Based in Tianjin in northern China, Tingyi-Asahi Beverages, a joint venture between Japan's largest brewer, Asahi Group Holdings, Taiwan's Ting Hsin Holding Corp and Hong Kong-listed Tingyi Holding Corp will buy the bottlers in China, excluding those in Hong Kong, Macau and Taiwan, from PepsiCo's unit Far East Bottlers.

Tingyi-Asahi will give Far East Bottlers an indirect 5 per cent stake by issuing new shares. The stake is expected to increase to 20 per cent if Far East Bottlers executes an option to buy additional new shares by 31 October 2015.

Under the deal, Tingyi-Asahi will manufacture and sell carbonated beverages under the Pepsi brand and non-carbonated beverages including Gatorade and Tropicana as PepsiCo's anchor bottler in China, while PepsiCo will retain branding, promotion and marketing responsibilities for these products.

''Entering into this strategic alliance with PepsiCo, while further strengthening the relationship with Asahi which started by the capital and business alliance agreement in 2004, will enable us to respond to every growth opportunity in the increasingly competitive beverage market in China and to provide world-class product offerings to our customers,'' said Ing-Chou Wei, chairman of Tingyi-Asahi.

The partnership will ''significantly'' enhance PepsiCo's beverage business in China, said Indra Nooyi, chairman and CEO in a statement. It will also maximise ''PepsiCo's future growth potential in the fastest-growing beverage market in the world,'' she added.