PepsiCo And Tingyi Finalize Strategic Alliance In China

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3/31/2012 2:47 AM ET

PepsiCo, Inc. (PEP: Quote) and Tingyi (Cayman Islands) Holding said they have completed transaction to create a strategic beverage alliance in China, which is anticipated to become the largest beverage market by 2015. The alliance was approved by Tingyi shareholders in February and obtained regulatory approval on March 29, 2012.

As part of the strategic alliance, Tingyi's beverage subsidiary, Tingyi-Asahi Beverages Holding Co. Ltd. or TAB is currently PepsiCo's franchise bottler in China.

TAB noted that it would team up with PepsiCo's current bottlers to manufacture, sell and distribute PepsiCo's carbonated soft drink and Gatorade brands. In addition, PepsiCo and TAB would begin co-branding their respective juice drink brands using the Tropicana brand name under license from PepsiCo. PepsiCo would retain branding and marketing responsibilities for these products.

Under the allianc terms, PepsiCo has contributed its indirect equity interests in its company-owned and joint venture bottling operations in China to TAB and received five percent indirect equity interest in TAB as consideration. Further, PepsiCo stated that it has an option to increase its indirect holding in TAB to 20 percent at its sole discretion by 2015.

PepsiCo and Tingyi alliance is anticipated to create long-term value for both the company shareholders, employees and local bottling partners. PepsiCo's existing JV partners, expects to gain benefits that would enhance business performance in the near-term while maximizing future growth potential.

PepsiCo Chairman and CEO Indra Nooyi commented, "China will soon surpass the United States to become the largest beverage market in the world. As a result of this new alliance with Tingyi, PepsiCo is extremely well positioned for long-term growth in China. By leveraging the complementary strengths of each company, we'll be able to significantly enhance our beverage business in China, reach millions of new consumers throughout the country, and create value for Tingyi and PepsiCo shareholders."

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by RTT Staff Writer

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