Pepsi’s bottler plans receive another blow

Posted by Editorial on 8th May 2009

PepsiCo’s bid to regain control over their distribution in the US has received another blow overnight with bottler Pepsi Americas rejecting their takeover offer.

Last month PepsiCo made a takeover proposal to their two largest bottlers, Pepsi Bottling Group (PBG) and Pepsi Americas (PAS), in a move designed to allow them to react quicker to market changes by taking over distribution. The offer has now been rejected by both bottlers, who claim the proposal undervalues their worth.

PepsiCo currently owns 33% of PBG and 43% of the outstanding shares of PAS.

“PepsiCo made full and fair offers for both companies, representing a premium of 17.1 per cent over the closing price of the common stock of PBG and PAS on April 17, 2009,” the world’s second largest non-alcoholic beverage company said in a statement. “On May 4, 2009 , PBG announced that its Board had rejected PepsiCo’s proposal. In addition, PBG also announced that its Board had approved adoption of a shareholder rights plan, commonly referred to as a “poison pill,” as well as retention arrangements for certain key employees and amendments to PBG ‘s bylaws regarding notice and informational requirements for stockholder actions.”

“PepsiCo reiterates its belief that its offers are full and fair and in the best interests of PBG, PAS and their respective shareholders,” they concluded.

Despite both bottlers looking to protect themselves from a hostile takeover, analysts are still anticipating Pepsi to pursue both deals – albeit at a higher price.