PepsiCo to buy stake of Wimm-Bill-Dann for $3.8B

PURCHASE, N.Y. (AP) — PepsiCo Inc. is buying a majority stake in Wimm-Bill-Dann Foods for $3.8 billion, making it the biggest Russian food and beverage company.

The move will also broaden PepsiCo’s presence in Eastern Europe and Central Asia and give it access to Wimm-Bill-Dann’s dairy and juice products, which include Chudo, J7 and Lubimy Sad.

PepsiCo has been ramping up its investments in Russia and other emerging markets to expand its business overseas, as some 40 percent of its revenue comes from outside the U.S. and Canada.

The soft drink and snack maker, whose brands include Tropicana, Frito-Lay, Quaker and Pepsi-Cola, announced a $1 billion investment program for Russia last year.

PepsiCo said Thursday it plans to pay for its 66 percent stake in Wimm-Bill-Dann with available cash and short-term debt financing. Each selling stockholder will receive $33 per American depositary receipt. PepsiCo said it will offer to buy the remaining stake in another bid following the initial offer’s completion.

PepsiCo Chairman and CEO Indra Nooyi said in a statement that the deal will help it provide customers with nutritious foods and drinks that are affordable and accessible.

PepsiCo, like many food companies, has started to look more at nutrition as consumers seek out healthier options. The Purchase, N.Y.-based company previously announced it was creating a new Global Nutrition Group to help it create new products and cut sodium, sugar and certain fats across its portfolio, including chips in its Frito-Lay division. Earlier this year, PepsiCo said it was setting out to triple its sales of healthier fare to $30 billion by 2020.

The Wimm-Bill-Dann acquisition will boost PepsiCo’s annual global revenue from nutritious and functional foods to almost $13 billion from approximately $10 billion.

The acquisition is expected to modestly add to PepsiCo’s earnings in the first year.

Wimm-Bill-Dann, founded in 1992, had revenue of about $2.4 billion for the year ended in June 2010. It has 38 manufacturing plants in Russia, the Ukraine and Central Asia with more than 16,000 employees.

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