Retailers, consumers and prices
Check Out Line: Billions for bottlers
PepsiCo is offering about $6 billion to buy the shares it does not already own in its two largest bottlers, Pepsi Bottling Group and PepsiAmericas, to cut costs and secure control of its brands as growth switches to new noncarbonated drinks.
Pepsi‘s plan to consolidate its bottling business underlines an industry trend and would give it control of 80 percent of its North America beverage distribution volume.
“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,” PepsiCo Chief Executive Officer Indra Nooyi said in a statement, adding that the deal will improve its competitiveness and growth prospects.
“The main driver of this deal would appear to be synergies which are estimated to be over $200 million pre-tax and include: reducing redundancy costs, scale efficiencies and realizing new revenue opportunities,” said Citi analyst Philip Morrisey.
PepsiCo also reported better-than-expected quarterly results and reaffirmed its outlook for the year. But the outlook does not include the impact of the proposed bids for its bottlers.
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