Fully-Integrated System Will Strategically Transform North American
Beverage Business - PepsiCo to acquire PBG and PAS for $36.50 per
share and $28.50 per share, respectively - Fully-integrated supply
chain and go-to-market system will position PepsiCo to accelerate
growth - PepsiCo will directly manage approximately 80 percent of
its total North American beverage volume distribution, including
both its direct-store-delivery and warehouse systems - Transaction
is expected to be accretive to PepsiCo's earnings by 15 cents per
share when synergies are fully realized PURCHASE, N.Y. and SOMERS,
N.Y. and MINNEAPOLIS Aug. 4 /PRNewswire-FirstCall/ -- PepsiCo
(NYSE:PEP) today announced that it has entered into definitive
merger agreements with The Pepsi Bottling Group, Inc. (NYSE:PBG)
and PepsiAmericas, Inc. (NYSE:PAS) under which PepsiCo will acquire
all of the outstanding shares of common stock it does not already
own in its two largest anchor bottlers. Under the agreements, PBG
shareholders will have the option to elect either $36.50 in cash or
0.6432 shares of PepsiCo common stock (which had a value of $36.50
based on PepsiCo closing share price of $56.75 on July 31, 2009)
for each share of PBG, subject to proration such that the aggregate
consideration to be paid to PBG shareholders shall be 50 percent
cash and 50 percent PepsiCo common stock. Similarly, PAS
shareholders will have the option to elect either $28.50 in cash or
0.5022 shares of PepsiCo common stock for each share of PAS (which
had a value of $28.50 based on PepsiCo closing share price of
$56.75 on July 31, 2009), subject to proration such that the
aggregate consideration to be paid to PAS shareholders shall be 50
percent cash and 50 percent PepsiCo common stock. The total value
of the shares that PepsiCo will be acquiring is about $7.8 billion,
and the acquisitions will create one of the largest food and
beverage companies globally. Based on the recommendations of the
Special Committee of PBG and the Transactions Committee of PAS, the
boards of directors of PBG and PAS, respectively, have approved the
transactions. This transaction is expected to create annual pre-tax
synergies of $300 million by 2012 largely due to greater cost
efficiency and also improved revenue opportunities. The
acquisitions are expected to be accretive to PepsiCo's earnings by
about 15 cents per share when synergies are fully realized in 2012.
PepsiCo Chairman and Chief Executive Officer Indra Nooyi said,
"PepsiCo has had a constructive partnership with PBG and PAS over
the past 10 years. While the existing model has served the system
very well, it is clear that the changing dynamics of the North
American liquid refreshment beverage business demand that we create
a more flexible, efficient and competitive system that can drive
growth across the full range of PepsiCo beverage brands. Our shared
culture, strong operational leadership and ability to successfully
integrate operations - in this case operations we know very well -
should allow us to bring the businesses together quickly and
seamlessly. "The fully integrated beverage business will enable us
to bring innovative products and packages to market faster,
streamline our manufacturing and distribution systems and react
more quickly to changes in the marketplace, much like we do with
our food business," Nooyi said. "It will also make it easier to
leverage 'Power of One' opportunities that involve both our
beverage and food offerings, and for PepsiCo to present one face to
retail customers. Ultimately it will put us in a much better
position to compete and to grow both now and in the years ahead."
"This transaction provides outstanding value for PBG shareholders,
offers new and expanded opportunities for PBG employees and
positions the combined company to accelerate growth going forward,"
said Eric Foss, Chairman and CEO of PBG. "PBG has a proven track
record of success driven by best-in-class execution, consistently
exceeding customer expectations and creating superior shareholder
value. After a thorough evaluation process, the PBG Board concluded
that this transaction represents full and fair value and is the
best outcome for PBG shareholders, employees and customers.
Ultimately, the transaction positions the entire Pepsi system to
continue to win in the marketplace." PepsiAmericas Chairman and
Chief Executive Officer Robert C. Pohlad said, "Over the past nine
years, PepsiAmericas and each of our employees have helped build a
remarkable organization. The success we have achieved is reflected
in the agreement reached with PepsiCo. This agreement provides
great value to our shareholders and an opportunity for them to
participate in the unique potential of this combination. Bringing
together these three great companies is bold and strategically
innovative, and will create a system unmatched in our industry."
Combination will drive future growth PepsiCo expects the
transaction to directly complement the transformation efforts
already underway in its North American beverage business. Those
efforts have included refreshing such brands as Pepsi and Gatorade
and introducing an array of new products, ranging from the
naturally sweetened zero-calorie SoBe Lifewater to low-calorie
Trop50. At the same time PepsiCo has taken steps to fundamentally
improve its cost structure. PepsiCo cited a number of specific
benefits it expects to realize by consolidating its two largest
bottlers: -- Consolidation of 80 percent of the North American
beverage volume will speed the decision-making process and
eliminate friction points -- Offering more compelling bundles
across food and beverage and providing enhanced customer service
nationally, taking the "Power of One" to the next level --
Consolidation of manufacturing networks will provide cost benefits
and also optimize our investments in growth and innovation --
Greater flexibility in deploying multiple go-to-market systems to
tailor distribution by channel -- Elimination of redundant costs to
leverage scale efficiencies Additional Information The acquisitions
are not subject to financing contingencies, but they are subject to
customary approvals, including regulatory approvals and approval of
the transaction by stockholders of PBG and PAS. The parties expect
the transactions to close in late 2009 or early 2010. Debt
financing commitments were provided by BofA Merrill Lynch and Citi.
Centerview Partners and BofA Merrill Lynch are acting as lead
financial advisors to PepsiCo. Citi is also acting as financial
advisor to PepsiCo. Davis Polk & Wardwell LLP is acting as
legal counsel to PepsiCo. Morgan Stanley is acting as financial
advisor to PBG, Perella Weinberg Partners provided a fairness
opinion and Cravath, Swaine & Moore is acting as legal counsel
to PBG. Goldman Sachs is acting as financial advisor to PAS, and
Sullivan & Cromwell and Briggs and Morgan are acting as legal
counsel. For more information please access our website at:
http://www.transactioninfo.com/pepsico Conference Call/Webcast
PepsiCo will host a webcast on August 4, 2009 at 9:30 a.m. Eastern
Time to discuss the transaction. The webcast can be accessed on the
investor relations section of PepsiCo's website,
http://www.pepsico.com/. About PepsiCo PepsiCo offers the world's
largest portfolio of billion-dollar food and beverage brands,
including 18 different product lines that each generate more than
$1 billion in annual retail sales. Our main businesses - Frito-Lay,
Quaker, Pepsi-Cola, Tropicana and Gatorade - also make hundreds of
other nourishing, tasty foods and drinks that bring joy to our
consumers in over 200 countries. With more than $43 billion in 2008
revenues, PepsiCo employs 198,000 people who are united by our
unique commitment to sustainable growth, called Performance with
Purpose. By dedicating ourselves to offering a broad array of
choices for healthy, convenient and fun nourishment, reducing our
environmental impact, and fostering a diverse and inclusive
workplace culture, PepsiCo balances strong financial returns with
giving back to our communities worldwide. For more information,
please visit http://www.pepsico.com/ About PBG The Pepsi Bottling
Group, Inc. (http://www.pbg.com/) is the world's largest
manufacturer, seller and distributor of Pepsi-Cola beverages. With
approximately 67,000 employees and annual sales of nearly $14
billion, PBG has operations in the U.S., Canada, Greece, Mexico,
Russia, Spain and Turkey. For more information, please visit
http://www.pbg.com/. About PepsiAmericas PepsiAmericas is the
world's second-largest manufacturer, seller and distributor of
PepsiCo beverages. With annual sales of $4.9 billion in 2008,
PepsiAmericas serves territories with a population of more than 200
million in a significant portion of a 19-state region in the U.S.;
Central and Eastern Europe, including Ukraine, Poland, Romania,
Hungary, the Czech Republic and Slovakia; and through the company's
new joint venture, the Caribbean and Central America. For more
information, please visit http://www.pepsiamericas.com/. Cautionary
Statement This communication does not constitute an offer to sell
or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval. PepsiCo, Inc. ("PepsiCo") and
The Pepsi Bottling Group, Inc. ("PBG") plan to file with the
Securities and Exchange Commission ("SEC") a registration statement
on Form S-4 containing a proxy statement/prospectus and other
documents with respect to the proposed acquisition of PBG and a
definitive proxy statement/prospectus will be mailed to
shareholders of PBG. PepsiCo and PepsiAmericas, Inc. ("PAS") plan
to file with the SEC a registration statement on Form S-4
containing a proxy statement/prospectus and other documents with
respect to the proposed acquisition of PAS and a definitive proxy
statement/prospectus will be mailed to shareholders of PAS.
INVESTORS AND SECURITY HOLDERS OF PBG AND PAS ARE URGED TO READ THE
APPLICABLE PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT WILL
BE FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors and security holders will be able to obtain free copies
of the registration statements and the proxy
statements/prospectuses (when available) and other documents filed
with the SEC by PepsiCo, PBG or PAS through the website maintained
by the SEC at http://www.sec.gov/. Copies of the documents filed
with the SEC by PepsiCo will be available free of charge on
PepsiCo's internet website at http://www.pepsico.com/ or by
contacting PepsiCo's Investor Relations Department at 914-253-3035.
Copies of the documents filed with the SEC by PBG will be available
free of charge on PBG's internet website at http://www.pbg.com/ or
by contacting PBG's Investor Relations Department at 914-767-7216.
Copies of the documents filed with the SEC by PAS will also be
available free of charge on PAS's internet website at
http://www.pepsiamericas.com/ or by contacting PAS's Investor
Relations Department at 612-661-3883. PBG and its directors,
executive officers and certain other employees may be deemed to be
participants in the solicitation of proxies in respect of the
proposed acquisitions of PBG. Information regarding PBG's directors
and executive officers is available in its Annual Report on Form
10-K for the year ended December 27, 2008, which was filed with the
SEC on February 20, 2009, and its proxy statement for its 2009
annual meeting of shareholders, which was filed with the SEC on
April 7, 2009. PAS and its directors, executive officers and
certain other employees may be deemed to be participants in the
solicitation of proxies in respect of the proposed acquisitions of
PAS. Information regarding PAS's directors and executive officers
is available in its Annual Report on Form 10-K for the year ended
January 3, 2009, which was filed with the SEC on March 4, 2009, and
its proxy statement for its 2009 annual meeting of shareholders,
which was filed with the SEC on March 18, 2009. Other information
regarding the participants in the proxy solicitations and a
description of their direct and indirect interests, by security
holdings or otherwise, will be contained in the proxy
statements/prospectuses and other relevant materials to be filed
with the SEC when they become available. Statements in this release
that are "forward-looking statements" are based on currently
available information, operating plans and projections about future
events and trends. They inherently involve risks and uncertainties
that could cause actual results to differ materially from those
predicted in such forward-looking statements. Such risks and
uncertainties include, but are not limited to: PepsiCo's ability to
consummate the acquisitions of PBG and PAS and to achieve the
synergies and value creation contemplated by the proposed
acquisitions; PepsiCo's ability to promptly and effectively
integrate the businesses of PBG, PAS and PepsiCo; the timing to
consummate the proposed acquisitions and any necessary actions to
obtain required regulatory approvals; the diversion of management
time on transaction-related issues; changes in demand for PepsiCo's
products, as a result of shifts in consumer preferences or
otherwise; increased costs, disruption of supply or shortages of
raw materials and other supplies; unfavorable economic conditions
and increased volatility in foreign exchange rates; PepsiCo's
ability to build and sustain proper information technology
infrastructure, successfully implement its ongoing business process
transformation initiative or outsource certain functions
effectively; damage to PepsiCo's reputation; trade consolidation,
the loss of any key customer, or failure to maintain good
relationships with PepsiCo's bottling partners, including as a
result of the proposed acquisitions; PepsiCo's ability to hire or
retain key employees or a highly skilled and diverse workforce;
changes in the legal and regulatory environment; disruption of
PepsiCo's supply chain; unstable political conditions, civil unrest
or other developments and risks in the countries where PepsiCo
operates; and risks that benefits from PepsiCo's Productivity for
Growth initiative may not be achieved, may take longer to achieve
than expected or may cost more than currently anticipated. For
additional information on these and other factors that could cause
PepsiCo's actual results to materially differ from those set forth
herein, please see PepsiCo's filings with the SEC, including its
most recent annual report on Form 10-K and subsequent reports on
Forms 10-Q and 8-K. Investors are cautioned not to place undue
reliance on any such forward-looking statements, which speak only
as of the date they are made. All information in this communication
is as of August 4, 2009. PepsiCo undertakes no obligation to update
any forward-looking statements, whether as a result of new
information, future events or otherwise. DATASOURCE: PepsiCo
CONTACT: Investors, Lynn Tyson, Senior Vice President, Investor
Relations, +1-914-253-3035, , or Media, Dick Detwiler, Senior Vice
President, PepsiCo International Communications, Office,
+1-914-253-2725, Mobile, +1-914-844-0855, ; or Jeff Dahncke, PBG
Public Relations, +1-914-767-7690, ; or PAS Investor Relations,
Sara Zawoyski, +1-612-661-3830, , or PAS Media Relations, Mary
Viola, +1-847-598-2870, Web Site: http://www.pepsico.com/
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