PepsiCo reaches agreement

PURCHASE, N.Y., SOMERS, N.Y. and MINNEAPOLIS, Minn. PepsiCo announced that it has entered into definitive merger agreements with The Pepsi Bottling Group and PepsiAmericas under which PepsiCo will acquire all of the outstanding shares of common stock it does not already own in its two largest anchor bottlers.

Under the agreements, PBG shareholders will have the option to elect either $36.50 in cash or 0.6432 shares of PepsiCo common stock for each share of PBG, subject to proration such that the aggregate consideration to be paid to PBG shareholders shall be 50% cash and 50% PepsiCo common stock. Similarly, PAS shareholders will have the option to elect either $28.50 in cash or 0.5022 shares of PepsiCo common stock for each share of PAS, subject to proration such that the aggregate consideration to be paid to PAS shareholders shall be 50% cash and 50% PepsiCo common stock.

The total value of the shares that PepsiCo will be acquiring is about $7.8 billion, and the acquisitions will create one of the largest food and beverage companies globally. Based on the recommendations of the Special Committee of PBG and the Transactions Committee of PAS, the boards of directors of PBG and PAS, respectively, have approved the transactions.

This transaction is expected to create annual pre-tax synergies of $300 million by 2012 largely due to greater cost efficiency and also improved revenue opportunities. The acquisitions are expected to be accretive to PepsiCo's earnings by about 15 cents per share when synergies are fully realized in 2012.

“The fully integrated beverage business will enable us to bring innovative products and packages to market faster, streamline our manufacturing and distribution systems and react more quickly to changes in the marketplace, much like we do with our food business," PepsiCo chairman and CEO Indra Nooyi said. "It will also make it easier to leverage 'Power of One' opportunities that involve both our beverage and food offerings, and for PepsiCo to present one face to retail customers. Ultimately it will put us in a much better position to compete and to grow both now and in the years ahead."