PepsiCo offered about $6 billion this morning buy the shares it does not already own in its two largest bottlers, Pepsi Bottling Group and PepsiAmericas, at the same time as reporting better-than-expected quarterly earnings.
The US drinks company's plan to consolidate its bottling business would give it control of 80 per cent of its North America beverage distribution volume.
PepsiCo said it was offering $29.50 per share in cash and stock for The Pepsi Bottling Group and $23.27 per share for PepsiAmericas, representing a 17.1 percent premium to Friday's close.
The offers consist of $14.75 in cash plus 0.283 shares of PepsiCo common stock for each share of Pepsi Bottling, and $11.64 in cash plus 0.223 shares of PepsiCo for each share of PepsiAmericas.
PepsiCo sees pretax synergies of more than $200 million annually and expects the deal add to its earnings by at least 15 cents a share.
"Consolidating the bottling businesses with our franchise company would create many benefits," PepsiCo chief executive Indra Nooyi said in a statement.
"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."
Pepsi Bottling said it will evaluate PepsiCo's proposal.
The company also reported better-than-expected quarterly results and reaffirmed its outlook for the year. However, the outlook does not include the impact of the proposed bids for its bottlers.
PepsiCo said its reported earnings-per-share grew 3 percent, while net revenue fell 1 per cent to $8.26 billion.
The company's core earnings were $1.11 billion, or 71 cents a share, for the quarter, while analysts, on average, were expecting the soft drinks maker to earn 67 cents a share, according to Reuters Estimates.
Shares of PepsiCo closed at $52.13 on Friday on the New York Stock Exchange.
Reuters