Pepsi OKs $7.8 Billion Pacts To Buy Rest Of Its 2 Biggest Bottlers

   DOW JONES NEWSWIRES 
 

PepsiCo Inc. (PEP) has reached agreements to acquire its two largest bottlers, succumbing to pressure to increase its nearly four-month-old bids to buy the remaining stakes of Pepsi Bottling Group Inc. (PBG) and PepsiAmericas Inc. (PAS) that it didn't already own.

The deal will allow Pepsi to control 80% of its North American beverage distribution, a move the company has said would allow it to cut costs as the region's soda sales have been stagnant for years in the industry.

Pepsi is valuing Pepsi Bottling at $36.50 a share, with PepsiAmericas at $28.50. That compares with April's per-share offers of $29.50 and $23.37, respectively. The deals are half-cash/half-stock. Pepsi said the shares it has agreed to acquire are valued at $7.8 billion, based on its new bids.

Pepsi Chairman and Chief Executive Indra Nooyi said while the company "has had a constructive partnership with" the bottlers for the past decade and "the existing model has served the system very well," changes in the North American beverage industry "demand that we create a more flexible, efficient and competitive system that can drive growth" of Pepsi's products.

A primary sore spot for Pepsi is Gatorade, whose new marketing campaign for the sports drink hasn't helped to stop falling sales. Total beverage volume in the Americas for Pepsi fell 6% in the second quarter.

Pepsi shares rose 3.3% recently to $58.05 while Pepsi Bottling and PepsiAmericas rose 7.1% to $36.02 and 7.4% to $28.12, respectively. The companies hope to close the deals no later than early 2010.

-By Kevin Kingsbury, Dow Jones Newswires; 212-416-2354; [e-mail]