Pepsico Offers $6 Billion for Bottlers

Company says merger would create 'cost synergies' and improve efficiency.

PepsiCo Inc. has made an offer to acquire its two largest bottlers for $6 billion, the company said April 20.

The company proposed to acquire The Pepsi Bottling Group and PepsiAmericas for $29.50 per share and $23.27 per share, respectively.

"If completed, the acquisitions would create a leaner, more agile business model and provide a stronger foundation for PepsiCo's future growth," according to a company statement.

Upon acquiring the outstanding shares of the two bottlers, PepsiCo would handle distribution of about 80% of its total North American beverage volume, including both its direct-store-delivery and warehouse systems.

"Our operating environment has evolved dramatically in the last decade. Retailers have continued to consolidate," PepsiCo Chairman and Chief Executive Officer Indra Nooyi said. "New competitors have emerged. And non-carbonated drinks, which have different economics and different distribution systems than carbonated soft drinks, have become a much bigger factor in the industry and in our own portfolio. We believe that by reshaping our business model we can significantly improve our competitiveness and our growth prospects."

Nooyi added that "consolidating the bottling businesses with our franchise company would create many benefits. We could unlock significant cost synergies, improve the speed of decision making and increase our strategic flexibility. We would be able to present a more unified face to our retail and food service customers, which would better position us to provide customized solutions, as we do at Frito-Lay, and to take to a new level our 'Power of One' program of bundled food and beverage offerings."

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