PepsiCo's big venture into Russia received a major boost on Dec. 28 when Prime Minister Vladimir Putin gave his blessing to the giant's takeover of a major local juice and dairy firm.
PepsiCo's intended purchase of Wimm-Bill-Dann is its biggest acquisition outside the United States and one of the most important deals ever struck outside the Russian energy sector.
PepsiCo on December 2 said that it had agreed to pay $5.4 billion for Russia's largest dairy and baby food producer. The takeover would enable PepsiCo to become not only the country's largest food-and-beverage business but also expand further into eastern Europe and the former Soviet states. Wimm-Bill-Dann -- named in honor of its founder's love for tennis -- controls just over 40% of Russia's juice market and 30% of the dairy market.
The announced agreement envisions PepsiCo taking immediate control of a 66% stake in Wimm-Bill-Dann for $3.8 billion. The remaining shares are to be bought progressively in an acquisition that PepsiCo hopes will enable it to establish a $30 billion nutrition business by 2020.
The takeover earned a nod of approval from the head of Russia's anti-monopoly service on Dec. 27 and still further supporter from the country's de facto leader Putin one day later.
"This deal's implementation will not only help our partners establish themselves on the Russian food market, but enter the markets of the Commonwealth of Independent States," ITAR-TASS quoted Putin as saying.
He added that PespiCo -- which was the first U.S. consumer goods company to break into the Soviet market in 1973 -- had promised to invest about one billion dollars in the Russian company over the next five years.
"This will help create more than one thousand new jobs," said Russia's formed president turned premier.
The acquisition appeared to be headed toward formal approval next month. News reports said the deal was approved on Dec. 28 by a government commission in charge of foreign investments and the head of Russia's anti-monopoly unit said that all formalities should be completed within a matter of weeks. "We are well disposed toward this deal," Igor Artemyev said in comments that mirrored those he issued on Dec. 27.
"I think that we will conclude this by January," Interfax quoted the anti-monopoly chief as saying.
Copyright Agence France-Presse, 2010