EINNEWS, December 6—The beverage industry is trying to come to grips today with the international implications of PepsiCo’s purchase of Wimm-Bill-Dann.
PepsiCo paid a steep price for Wimm-Bill-Dan,n one of Europe’s biggest dairy products companies. The company is headquartered in Moscow and has 30 production sites in 16 cities producing yogurt, milk, fruit juices and other juice and soft drinks.
The Wimm-Bill-Dan acquisition follows PepsiCo’s 2008 purchase of a majority stake in Lebedyansky, Russia’s largest juice producer.
The $33 share price paid by PepsiCo is a 32 percent premium over the company’s 30-day moving average. It totals $3.8 billion for 66 percent of the company’s shares and vaults Pepsico ahead of Coca-Coca, which recently purchased Nidan, Russia’s fourth-largest juice maker.
PepsiCo President Indra Nooyi has been pushing to move the company into products more nutritious than its traditional line of sugared soft drinks and snacks. The Wimm-Bill-Dann deal will raise the company’s revenues from more nutritious food sales from $10 billion to about $13 billion.
While the commercial aspects was being hammered out both PepsiCo and WBD management expressed concern that the Russian government could intervene at the last moment to scuttle the deal. That’s when Nooyi called in Don Kendall, a former PepsiCo CEO made famous back in 1959 when he encouraged former Russian Premier Nikita Khrushchev to take his first sip of Pepsi. PepsiCo entered the Russian market 15 years later.
Kendall arranged for a face-to-fact meeting with current Russian foreign minister Vladimir Putin which apparently cleared the way for the sale.
“It’s serves a wonderful role in helping us kick-start our dairy business,” Nooyi said. PepsiCo plans to integrate dairy products into snacks and drinks, not just sell packaged milk. “This is a very, very important strategic move.”
PepsiCo had considered buying Wimm-Bill-Dann for years and was able to pursue a deal after Danone SA agreed to sell its 18 per cent stake in Wimm-Bill-Dann in August. Danone divested the holding to address antitrust concerns in Russia after buying another dairy company in the country.
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