DealZone

Pepsi Bottling says PepsiCo offer flat

May 4, 2009

BRITAIN/Pepsi Bottling has rejected PepsiCo’s $6 billion offer for it and its main bottling competitor as “grossly inadequate”. Given the two-headed nature of this best, don’t be surprised to hear the same story from PepsiAmericas. On a price-to-earnings basis, the offer values Pepsi Bottling at a 6 percent discount to PepsiCo, and PepsiAmericas at a 9 percent discount, according to JP Morgan analysts, and the 17 percent premium offered to both was greeted with little enthusiasm, particularly once the bottlers, and PepsiCo, beat forecasts with their first-quarter earnings.

As Jessica Hall has reported, an unusual condition requiring both bottlers agree may actually encourage the two to fight independently for the best price. Deutsche Bank analyst Marc Greenberg told her a 10 percent increase in the offer price would still create value for shareholders of the three companies involved, and UBS analyst Kaumil Gajrawala said the takeout premiums seemed small compared with the proposed benefits and synergies outlined. Gajrawala said the offers for Pepsi Bottling and PepsiAmericas could go as high as the mid-$30s and mid-$20s, respectively.

Deals of the day:

* Fiat SpA’s chief executive visits Berlin on Monday to try to convince Germany’s political leaders to sign up to his vision for a new European car giant by letting him take over General Motors Corp’s Opel unit.

*  A senior executive of Chinese metals firm Chinalco stands by a planned $19.5 billion tie-up with global miner Rio Tinto amid speculation Rio might try to revise part of the deal to win shareholder support, according to an interview in the Financial Times.

* U.S. private-equity firm Kohlberg Kravis Roberts & Co is finalizing an agreement to buy Anheuser-Busch InBev NV’s South Korean brewer Oriental Brewery Co for about $1.8 billion, sources familiar with the situation said.

* The Azrieli Group said it bid for part of Cerberus Capital Management’s and Gabriel Capital Corp’s 9.8 percent stake in Bank Leumi.

* Shares in Quadrant AG jumped 24 percent to 87 francs, after Amsterdam-based affiliate Aquamit offered 86 Swiss francs per share to take over the Swiss thermoplastics manufacturer.

* New York investment adviser Beck, Mack & Oliver LLC said it acquired money manager Austin Investment Management Inc, creating a firm handling $3.1 billion for individual and institutional investors.

(PHOTO:Pepsi bottles sit on a conveyor belt at drinks company Britvic’s bottling plant in London March 25, 2009. REUTERS/Luke MacGregor)

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