You are here
NEW YORK -- Pepsi Bottling Group Inc. rejected what it called a "grossly inadequate" acquisition offer from soft drink maker PepsiCo Inc., according to a Bloomberg report.
The $6 billion proposal made on April 20 for Pepsi Bottling and PepsiAmericas would have let PepsiCo control about 80 percent of its total North American beverage volume.
Bloomberg reported that Pepsi Bottling could get at least $8.50 more than the equivalent of $29.50 a share PepsiCo offered, according to Bill Pecoriello, an analyst with Consumer Edge Research in Stamford, Conn. PepsiCo reportedly wants to buy back the shares of the companies it doesn't already own to regain control over soft drink sales.
"We believe these transactions will get done and that the bottlers will meet PepsiCo somewhere in the middle," Pecoriello said in a note. He estimated PepsiCo could save $600 million to $800 million annually within three years if it acquires the two companies.
"The PBG board will not agree to a proposal, which does not reflect the true value of PBG," Pepsi Bottling Group Chief Executive Officer Eric Foss and Ira D. Hall, a director, said in an open letter to PepsiCo CEO Indra Nooyi.
Pepsi Bottling pointed out in the letter that PepsiCo’s bid came two days before the distributor reported earnings that beat analysts’ estimates and raised its full-year forecast. Two PepsiCo executives, Cynthia Mary Trudell and John Compton, sit on Pepsi Bottling's board.
In its letter to PepsiCo, Pepsi Bottling said the committee determined that savings generated by combining PepsiCo with its two largest bottlers would be "multiples of the $200 million."
-- PepsiCo Soft Drink Unit to Function More Like Snack Biz
-- Pepsi-Lipton Partnership Launches Sparkling Iced Tea
-- Pepsico to Distribute Rockstar via Pepsi Bottlers