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LAKEVILLE, Mass. -- The grower-owners of juice maker Ocean Spray Inc. will vote later this month on a bid by PepsiCo Inc. to buy a stake in the cooperative, reported the Associated Press.
The bid has been discussed privately by Ocean Spray and Pepsi officials and the specifics are unknown. The Standard-Times of New Bedford, Mass., reported the deal has been characterized as anything from a minority investment to a 50-50 split.
Ocean Spray's 800 cranberry and 125 grapefruit grower-owners will vote on Pepsi's bid in a non-binding referendum during the week of May 23, said Chris Phillips, an Ocean Spray spokesman.
The referendum asks the shareholders to pick between two options: pursuing a branded-company joint venture with Pepsi, or remaining independent. If a majority of growers vote in favor of a venture with Pepsi, Ocean Spray will work on a final deal that would be put to growers in a binding vote late this summer, Phillips said.
If grower-owners reject a Pepsi venture, Ocean Spray's board of directors has agreed to cease all joint venture discussions with potential financial partners and determine its own future course, Phillips added.
Ocean Spray's small cooperative of cranberry farmers has struggled to compete against its main rivals in the juice business, Tropicana and Minute Maid, which are owned by Pepsi and Coca-Cola, respectively.
While it's tough to compete with the juice giants, if the deal happens, Pepsi may eventually swallow Ocean Spray, said one owner-grower. "The fear is that Pepsi would control you," the grower told the Standard-Times. "We don't know if Pepsi would just move in with their entire management team. There's fear that Pepsi would eventually buy out Ocean Spray."
Ocean Spray and Pepsi had a prior business relationship that ended acrimoniously.
Pepsi distributed Ocean Spray juices to convenience stores in the 1990s, but Ocean Spray sued Pepsi in 1998, aiming to block Pepsi from selling Tropicana cranberry juice in convenience stores, according to the AP.