PepsiCo Completes Acquiring Majority Stake in Russia's Lebedyansky - Update

Thursday, PepsiCo Inc. (PEP) announced that, through a 75:25 joint venture with The Pepsi Bottling Group (PBG), it has completed acquiring majority stake in Russia's leading juice company JSC Lebedyansky for approximately US$1.4 billion.

After hinting on the acquisition plan a year back on August 13, 2007 and reaching an agreement on March 20, 2008, PepsiCo and Pepsi Bottling have now completed acquiring 75.53% of Lebedyansky's stake held by four largest individual shareholders.

The approximately US$1.4 billion paid to acquire the stake in Lebedyansky implies a total enterprise value for Lebedyansky, including debt and spin-off related adjustments, and excluding the company's baby food and mineral water business worth approximately US$2 billion, which earlier were spun off to shareholders in a separate transaction.

Lebedyansky, at present, is the world's sixth-largest juice manufacturer and the largest in Russia, with an estimated market share in Russia of around 30% and annual revenues in 2007 of approximately $800 million from its juice business.

Both PepsiCo and Pepsi Bottling indicated the transaction would not materially affect their previously provided guidance for 2008. For the full year, PepsiCo expects earnings of at least $3.72 per share, excluding accounting-related items, while Pepsi Bottling, the largest bottler of Pepsi-Cola beverages, expects earnings per share of $2.30-$2.38.

The acquirers said they would initiate a mandatory offer for the remaining shares of Lebedyansky, in accordance with Russian law, in the near future.

PEP ended Thursday's regular trading up 0.10% at $69.27 while PBG ended up 2.03% at $30.09, both on the New York Stock Exchange.

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