Two bottling franchisees that are among the main units serving PepsiCo are at the center of Pepsi’s latest strategic consideration.
The Purchase, N.Y.-based company, which is parent company to Plano-based Frito-Lay North America, said Monday it has proposed acquiring the majority interest in two franchisees: The Pepsi Bottling Group and PepsiAmericas.
The proposal, if enacted, would allow PepsiCo (NYSE: PEP) to purchase common stock not already owned by the beverage giant, creating a transactional value of $6 billion, with shares of PepsiAmericas (NYSE: PAS) currently valued at $23.27 per share and $29.50 per share for The Pepsi Bottling Group.
The idea behind the transaction is the fact that the combined company would create a fully integrated supply chain business model that would accelerate activity and profit.
“Consolidating the bottling businesses (franchisees) with our franchise company would create many benefits,” said PepsiCo chairman and CEO Indra Nooyi. “We could unlock significant cost synergies, improve the speed of decision-making and increase our strategic flexibility. We would be able to present a more unified face to our retail and food service customers, which would better position us to provide customized solutions, as we do at Frito-Lay, and to take to a new level our ‘Power of One’ program of bundled food and beverage offerings.”
Overall, PepsiCo says the consolidation will create annual pre-tax synergies worth more than $200 million due to the acquisitions’ effect on cost reduction.