PepsiCo acquires 66 percent of Russia's Wimm-Bill-Dann Foods for $3.8 billion

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PepsiCo acquires 66 percent of Russia's Wimm-Bill-Dann Foods for $3.8 billion

2010-12-03 00:32:25 GMT+7 (ICT)

PURCHASE, NEW YORK (BNO NEW) — PepsiCo and Russia's Wimm-Bill-Dann Foods OJSC on Thursday announced that PepsiCo has agreed to acquire 66% of Wimm-Bill-Dann for $3.8 billion.

While Wimm-Bill-Dann is Russia's leading branded food-and-beverage company, the transaction will establish PepsiCo as the largest food-and-beverage business in Russia, make it a leader in the country's fast-growing dairy category and build its presence in key markets in Eastern Europe and Central Asia.

It also will raise PepsiCo's annual global revenues from nutritious and functional foods from its current estimated $10 billion to nearly $13 billion. This moves the company closer to its strategic goal of building a $30 billion nutrition business by 2020.

Under the acquisition agreement, PepsiCo will acquire 66 percent of Wimm-Bill-Dann from a group of shareholders and subsidiaries of Wimm-Bill-Dann. 

The approximately $3.8 billion PepsiCo will pay to acquire the stake in Wimm-Bill-Dann implies a total enterprise value of approximately $5.4 billion. The price being paid by PepsiCo to the selling shareholders – $33.00 per ADR share (which is equivalent to $132.00 per ordinary Russian share) – represents a premium of 32 percent to the 30-day average trading price of Wimm-Bill-Dann's ADR shares.  

PepsiCo indicated the transaction is expected to be modestly accretive to earnings in year one (excluding one-time transaction costs and fees), as the company expects the combination to have the potential for total pre-tax annual run-rate synergies of approximately $100 million by 2014.

The transaction, which is pending the government approvals, will be funded through a combination of internal cash on hand and short-term debt financing, preserving balance sheet flexibility.

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