PepsiCo, Bottler Buying 80 Percent Stake In Ukraine-Based Juice Maker Sandora For $542 Million

NEW YORK, NY -- PepsiCo Inc., the second biggest U.S. soft drink company, and an affiliated bottler are paying $542 million (€402.38 million) for a majority stake in a Ukraine-based juice company, with plans to buy the rest of the company later this year.

The acquisition announced Thursday is the first under a joint venture of PepsiCo and Minneapolis, Minnesota-based PepsiAmericas Inc., the bottler's chief executive, Robert Pohlad, told investors on a conference call.

PepsiCo and PepsiAmericas said they would buy an 80 percent stake in Sandora LLC, which they said was the leading juice maker in the former Soviet bloc country.

The acquisition gives it a base in the growing Central and Eastern European market, according to Pohlad.

He said the juice market in the Ukraine is growing 17 percent a year, and the company would continue to look for opportunities in the region.

The two companies expect to acquire the remaining 20 percent of Sandora in November.

Carbonated beverage makers are trying to expand their product offerings to juice and other non-carbonated drinks to meet shifting consumer tastes.

PepsiCo Chief Executive Indra Nooyi said in April that the company has a "rich acquisition pipeline," and its other recent non-cola beverage acquisitions include Izze Beverage Co. and Naked Juice Co.

The deal also fits with its strategy to expand in international markets.

PepsiCo's bigger rival The Coca-Cola Co. recently announced the purchase of Glaceau, the maker of Vitaminwater.

PepsiCo, based in Purchase, New York, expects the deal to close in the third quarter.

It will book the results as an equity investment and said the purchase will have no effect on financial guidance for 2007.

PepsiAmericas, an independently-traded company which is one of the largest bottlers of PepsiCo beverages, will own a 60 percent interest in the venture buying Sandora.

PepsiAmericas will manage the day-to-day operations of the business, while PepsiCo will oversee the brand development.

In addition to its operations in 19 U.S. states, PepsiAmericas has businesses in Central Europe and the Caribbean.

It expects the deal to shave 2 cents to 3 cents per share off 2007 earnings. But the company reiterated its full-year profit target of $1.35 to $1.40 per share.

It expects Sandora to add a penny per share to profit starting in 2008.

PepsiCo shares slipped 9 cent to $66.97 in morning trading while PepsiAmericas shares rose 25 cents to $24.21.

Source: International Herald Tribune