While specific figures regarding these synergies have not been made public, benchmarking PepsiCo’s success with the acquisition of its bottling partners is not difficult. As the bottling business is naturally less profitable than that of selling syrups, it is natural to expect PepsiCo’s gross margin percentage to head lower post-merger. This reality is taken into account with a reminder that the macroeconomic trend in North America is decreasing carbonated beverage consumption per capita. Further, PepsiCo issued millions of new shares of common stock when it acquired its two largest bottling partners. Despite these factors, which have all negatively impacted the company’s earnings per share (EPS), PepsiCo’s third-quarter 2010 EPS came to $1.19, up 10 cents from the prior year quarter, which was also prior to the M&A activity.[ Alazraki, Melly. "PepsiCo Earnings, Revenue Rise on Bottlers Acquisition." DailyFinance. 7 Oct. 2010. Web. 01 May 2011. http://www.dailyfinance.com/2010/10/07/pepsico-earnings-revenue-rise-on-bottlers-acquisition/ .] This suggests that at least some synergies were recognized right away from the first-quarter 2010 mergers, and it’s those cost reductions which fought the negative headwinds facing PepsiCo. The result is significantly higher EPS. Without specific synergy figures from the company, a bit of deduction suggests that PepsiCo’s CEO Nooyi is telling the truth, and that significant cost savings from the merger are unfolding. This relationship translates to Coca-Cola’s acquisition of CCE, as the transactions almost mirror one another. The likelihood of Coca-Cola realizing significant cost savings, and therefore bottom-line growth, from its acquisition of CCE’s North American operations is a virtual certainty.
More posts from a paper on Coca-Cola M&A Activity (including merger with CCE):
Coca-Cola M&A Activity, CCE Acquisition: Executive Summary
Coca-Cola M&A Activity: Introduction
Coca-Cola M&A Activity: Product Trends
Coca-Cola M&A Activity: Demand and Economic Trends
Coca-Cola M&A Activity: Business Model Trends in the Beverage Industry
Coca-Cola M&A Activity: Beverage Industry Business Model Trends (2)
Coca-Cola M&A Activity: Company Strategic Objectives
Coca-Cola M&A Activity: Company Strategic Objectives (2)
Coca-Cola M&A Activity: Company Portfolio Analysis
Coca-Cola M&A Activity: Company Portfolio Analysis (2)
Coca-Cola M&A Activity: Company Portfolio Analysis (3)
Coca-Cola M&A Activity: PepsiCo M&A Portfolio Analysis (Largest Competitor)
Coca-Cola M&A Activity: PepsiCo M&A Portfolio Analysis (Largest Competitor) (2)
Coca-Cola M&A Activity: Other Beverage Industry M&A Activity
Coca-Cola Acquisition of CCE North America: Deal Structure
Coca-Cola Acquisition of CCE North America: Deal Structure (2)
Coca-Cola Acquisition of CCE North America: Major Legal and Financial Players
Coca-Cola Acquisition of CCE North America: Regulatory and Shareholder Approval of the Transaction
Coca-Cola Acquisition of CCE North America: Implementation Analysis: Likelihood of Acquisition Success
Coca-Cola Acquisition of CCE North America: Implementation Analysis: Likelihood of Acquisition Success (2)
Coca-Cola Acquisition of CCE North America: Conclusion to M&A Deal Analysis
Coca-Cola CCE Merger: Table of Contents and Works Cited List
Showing posts with label pepsico. Show all posts
Showing posts with label pepsico. Show all posts
Sunday, May 29, 2011
Coca-Cola M&A Activity: Other Beverage Industry M&A Activity
Other Beverage Industry M&A Analysis
Exhibit 6 features an array of nine beverage industry M&A deals ranging from 2003 to 2011. This spread covers beverage companies that sell soda, juice, sports drinks, coffee, tea, bottled water, liquor, and beer. The principal objective of each acquiring company is outlined. A central theme to this compendium of deals is the goal of companies to access new markets or gain market share. In some cases this involves acquiring another brand. In the cases of Cadbury Schweppes, InBev, and Starbucks, the “buy-a-brand” model is apparent. In the cases of Cott Corp. and the Mark T. Wendell Tea Co., the objective varies slightly with generating operational efficiencies at the forefront of the deal. This divison of objectives is clearly indicative of the greater beverage industry trend duopoly previously presented, which includes brand acquisition and operational streamlining. This pattern of behavior is exactly the market strategy that both Coca-Cola and PepsiCo have employed over the last decade to enhance shareholder value.
More posts from a paper on Coca-Cola M&A Activity (including merger with CCE):
Coca-Cola M&A Activity, CCE Acquisition: Executive Summary
Coca-Cola M&A Activity: Introduction
Coca-Cola M&A Activity: Product Trends
Coca-Cola M&A Activity: Demand and Economic Trends
Coca-Cola M&A Activity: Business Model Trends in the Beverage Industry
Coca-Cola M&A Activity: Beverage Industry Business Model Trends (2)
Coca-Cola M&A Activity: Company Strategic Objectives
Coca-Cola M&A Activity: Company Strategic Objectives (2)
Coca-Cola M&A Activity: Company Portfolio Analysis
Coca-Cola M&A Activity: Company Portfolio Analysis (2)
Coca-Cola M&A Activity: Company Portfolio Analysis (3)
Coca-Cola M&A Activity: PepsiCo M&A Portfolio Analysis (Largest Competitor)
Coca-Cola M&A Activity: PepsiCo M&A Portfolio Analysis (Largest Competitor) (2)
Coca-Cola M&A Activity: Other Beverage Industry M&A Activity
Coca-Cola Acquisition of CCE North America: Deal Structure
Coca-Cola Acquisition of CCE North America: Deal Structure (2)
Coca-Cola Acquisition of CCE North America: Major Legal and Financial Players
Coca-Cola Acquisition of CCE North America: Regulatory and Shareholder Approval of the Transaction
Coca-Cola Acquisition of CCE North America: Implementation Analysis: Likelihood of Acquisition Success
Coca-Cola Acquisition of CCE North America: Implementation Analysis: Likelihood of Acquisition Success (2)
Coca-Cola Acquisition of CCE North America: Conclusion to M&A Deal Analysis
Coca-Cola CCE Merger: Table of Contents and Works Cited List
Exhibit 6 features an array of nine beverage industry M&A deals ranging from 2003 to 2011. This spread covers beverage companies that sell soda, juice, sports drinks, coffee, tea, bottled water, liquor, and beer. The principal objective of each acquiring company is outlined. A central theme to this compendium of deals is the goal of companies to access new markets or gain market share. In some cases this involves acquiring another brand. In the cases of Cadbury Schweppes, InBev, and Starbucks, the “buy-a-brand” model is apparent. In the cases of Cott Corp. and the Mark T. Wendell Tea Co., the objective varies slightly with generating operational efficiencies at the forefront of the deal. This divison of objectives is clearly indicative of the greater beverage industry trend duopoly previously presented, which includes brand acquisition and operational streamlining. This pattern of behavior is exactly the market strategy that both Coca-Cola and PepsiCo have employed over the last decade to enhance shareholder value.
More posts from a paper on Coca-Cola M&A Activity (including merger with CCE):
Coca-Cola M&A Activity, CCE Acquisition: Executive Summary
Coca-Cola M&A Activity: Introduction
Coca-Cola M&A Activity: Product Trends
Coca-Cola M&A Activity: Demand and Economic Trends
Coca-Cola M&A Activity: Business Model Trends in the Beverage Industry
Coca-Cola M&A Activity: Beverage Industry Business Model Trends (2)
Coca-Cola M&A Activity: Company Strategic Objectives
Coca-Cola M&A Activity: Company Strategic Objectives (2)
Coca-Cola M&A Activity: Company Portfolio Analysis
Coca-Cola M&A Activity: Company Portfolio Analysis (2)
Coca-Cola M&A Activity: Company Portfolio Analysis (3)
Coca-Cola M&A Activity: PepsiCo M&A Portfolio Analysis (Largest Competitor)
Coca-Cola M&A Activity: PepsiCo M&A Portfolio Analysis (Largest Competitor) (2)
Coca-Cola M&A Activity: Other Beverage Industry M&A Activity
Coca-Cola Acquisition of CCE North America: Deal Structure
Coca-Cola Acquisition of CCE North America: Deal Structure (2)
Coca-Cola Acquisition of CCE North America: Major Legal and Financial Players
Coca-Cola Acquisition of CCE North America: Regulatory and Shareholder Approval of the Transaction
Coca-Cola Acquisition of CCE North America: Implementation Analysis: Likelihood of Acquisition Success
Coca-Cola Acquisition of CCE North America: Implementation Analysis: Likelihood of Acquisition Success (2)
Coca-Cola Acquisition of CCE North America: Conclusion to M&A Deal Analysis
Coca-Cola CCE Merger: Table of Contents and Works Cited List
Coca-Cola M&A Activity: PepsiCo M&A Portfolio Analysis (Largest Competitor) (2)
Exhibit 4: Quick View of Two PepsiCo M&A Deals
Undoubtedly the most pertinent transaction of PepsiCo’s M&A activity is the company’s merger with its two largest bottling partners in late 2009, early 2010. PepsiCo’s consideration for both companies was targeted for 50% cash and 50% PepsiCo common stock. Expected pre-tax synergies of $300 million were expected to be realized by 2012.[ "PepsiCo Reaches Merger Agreements with Pepsi Bottling Group and PepsiAmericas." PepsiCo. 4 Aug. 2009. Web. 01 May 2011. http://www.pepsico.com/PressRelease/PepsiCo-Reaches-Merger-Agreements-with-Pepsi-Bottling-Group-and-PepsiAmericas08042009.html .] Total PepsiCo consideration for both companies was valued at $7.8 billion. PepsiCo CEO Nooyi, in selling the proposed acquisition to stakeholders, summarized the industry condition well:
“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.”[ Ibid.]
The selling point of this deal to regulators was the apparent quick, seamless integration of the businesses resulting from PepsiCo’s industry expertise. The estimated synergies are expected to help keep costs low to consumers. To shareholders, the company claims this M&A deal will accelerate company growth going forward. What this deal gets reduced to is the simple realization that with no more licensing with bottling partners, there will be no more reduced royalties coming in. The realized synergies will simply boost cash flow by cutting out a middleman. This extra cash flow will let PepsiCo invest in other companies and products, and effectively accelerate the growth of the firm. Exhibit 5 presents a summary of the two bottling companies.[ Ibid. ] Specific benefits PepsiCo says the merger of a bottling company and its bottling partners creates include:
“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”[ Ibid.]
The 80% figure is specific to PepsiCo’s bottlers, but not far off from Coke’s 90%-plus figure. When PepsiCo acquires these companies, the same way Coke purchases CCE as will later become apparent, the financial consideration is entirely cash and stock. As such, no financing contingencies exist that might prevent the deal from coming to fruition. On the contrary, the deal will require regulatory approval as well as a signoff by both bottling companies’ shareholders.
Federal Trade Commission (FTC) regulators came back to Pepsi with conditions identical to what Coca-Cola ultimately agreed to abide by in its acquisition of CCE. PBG and PAS both bottling products for Dr. Pepper Snapple Group, a smaller competitor to both Coke and PepsiCo. The FTC complaint reads: “The FTC’s proposed consent order is designed to remedy these potential problems by requiring PepsiCo to set up a “firewall” so that the sensitive information cannot be accessed by anyone at PepsiCo who may be in an position to use the information against Dr Pepper Snapple.”[ "FTC Puts Conditions on PepsiCo's $7.8 Billion Acquisition of Two Largest Bottlers and Distributors." Federal Trade Commission. 26 Feb. 2010. Web. 01 May 2011. http://www.ftc.gov/opa/2010/02/pepsi.shtm .] Compliant with these terms, PepsiCo closed its acquisitions in February 2010.
More posts from a paper on Coca-Cola M&A Activity (including merger with CCE):
Coca-Cola M&A Activity, CCE Acquisition: Executive Summary
Coca-Cola M&A Activity: Introduction
Coca-Cola M&A Activity: Product Trends
Coca-Cola M&A Activity: Demand and Economic Trends
Coca-Cola M&A Activity: Business Model Trends in the Beverage Industry
Coca-Cola M&A Activity: Beverage Industry Business Model Trends (2)
Coca-Cola M&A Activity: Company Strategic Objectives
Coca-Cola M&A Activity: Company Strategic Objectives (2)
Coca-Cola M&A Activity: Company Portfolio Analysis
Coca-Cola M&A Activity: Company Portfolio Analysis (2)
Coca-Cola M&A Activity: Company Portfolio Analysis (3)
Coca-Cola M&A Activity: PepsiCo M&A Portfolio Analysis (Largest Competitor)
Coca-Cola M&A Activity: PepsiCo M&A Portfolio Analysis (Largest Competitor) (2)
Coca-Cola M&A Activity: Other Beverage Industry M&A Activity
Coca-Cola Acquisition of CCE North America: Deal Structure
Coca-Cola Acquisition of CCE North America: Deal Structure (2)
Coca-Cola Acquisition of CCE North America: Major Legal and Financial Players
Coca-Cola Acquisition of CCE North America: Regulatory and Shareholder Approval of the Transaction
Coca-Cola Acquisition of CCE North America: Implementation Analysis: Likelihood of Acquisition Success
Coca-Cola Acquisition of CCE North America: Implementation Analysis: Likelihood of Acquisition Success (2)
Coca-Cola Acquisition of CCE North America: Conclusion to M&A Deal Analysis
Coca-Cola CCE Merger: Table of Contents and Works Cited List
Undoubtedly the most pertinent transaction of PepsiCo’s M&A activity is the company’s merger with its two largest bottling partners in late 2009, early 2010. PepsiCo’s consideration for both companies was targeted for 50% cash and 50% PepsiCo common stock. Expected pre-tax synergies of $300 million were expected to be realized by 2012.[ "PepsiCo Reaches Merger Agreements with Pepsi Bottling Group and PepsiAmericas." PepsiCo. 4 Aug. 2009. Web. 01 May 2011. http://www.pepsico.com/PressRelease/PepsiCo-Reaches-Merger-Agreements-with-Pepsi-Bottling-Group-and-PepsiAmericas08042009.html .] Total PepsiCo consideration for both companies was valued at $7.8 billion. PepsiCo CEO Nooyi, in selling the proposed acquisition to stakeholders, summarized the industry condition well:
“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.”[ Ibid.]
The selling point of this deal to regulators was the apparent quick, seamless integration of the businesses resulting from PepsiCo’s industry expertise. The estimated synergies are expected to help keep costs low to consumers. To shareholders, the company claims this M&A deal will accelerate company growth going forward. What this deal gets reduced to is the simple realization that with no more licensing with bottling partners, there will be no more reduced royalties coming in. The realized synergies will simply boost cash flow by cutting out a middleman. This extra cash flow will let PepsiCo invest in other companies and products, and effectively accelerate the growth of the firm. Exhibit 5 presents a summary of the two bottling companies.[ Ibid. ] Specific benefits PepsiCo says the merger of a bottling company and its bottling partners creates include:
“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”[ Ibid.]
The 80% figure is specific to PepsiCo’s bottlers, but not far off from Coke’s 90%-plus figure. When PepsiCo acquires these companies, the same way Coke purchases CCE as will later become apparent, the financial consideration is entirely cash and stock. As such, no financing contingencies exist that might prevent the deal from coming to fruition. On the contrary, the deal will require regulatory approval as well as a signoff by both bottling companies’ shareholders.
Federal Trade Commission (FTC) regulators came back to Pepsi with conditions identical to what Coca-Cola ultimately agreed to abide by in its acquisition of CCE. PBG and PAS both bottling products for Dr. Pepper Snapple Group, a smaller competitor to both Coke and PepsiCo. The FTC complaint reads: “The FTC’s proposed consent order is designed to remedy these potential problems by requiring PepsiCo to set up a “firewall” so that the sensitive information cannot be accessed by anyone at PepsiCo who may be in an position to use the information against Dr Pepper Snapple.”[ "FTC Puts Conditions on PepsiCo's $7.8 Billion Acquisition of Two Largest Bottlers and Distributors." Federal Trade Commission. 26 Feb. 2010. Web. 01 May 2011. http://www.ftc.gov/opa/2010/02/pepsi.shtm .] Compliant with these terms, PepsiCo closed its acquisitions in February 2010.
More posts from a paper on Coca-Cola M&A Activity (including merger with CCE):
Coca-Cola M&A Activity, CCE Acquisition: Executive Summary
Coca-Cola M&A Activity: Introduction
Coca-Cola M&A Activity: Product Trends
Coca-Cola M&A Activity: Demand and Economic Trends
Coca-Cola M&A Activity: Business Model Trends in the Beverage Industry
Coca-Cola M&A Activity: Beverage Industry Business Model Trends (2)
Coca-Cola M&A Activity: Company Strategic Objectives
Coca-Cola M&A Activity: Company Strategic Objectives (2)
Coca-Cola M&A Activity: Company Portfolio Analysis
Coca-Cola M&A Activity: Company Portfolio Analysis (2)
Coca-Cola M&A Activity: Company Portfolio Analysis (3)
Coca-Cola M&A Activity: PepsiCo M&A Portfolio Analysis (Largest Competitor)
Coca-Cola M&A Activity: PepsiCo M&A Portfolio Analysis (Largest Competitor) (2)
Coca-Cola M&A Activity: Other Beverage Industry M&A Activity
Coca-Cola Acquisition of CCE North America: Deal Structure
Coca-Cola Acquisition of CCE North America: Deal Structure (2)
Coca-Cola Acquisition of CCE North America: Major Legal and Financial Players
Coca-Cola Acquisition of CCE North America: Regulatory and Shareholder Approval of the Transaction
Coca-Cola Acquisition of CCE North America: Implementation Analysis: Likelihood of Acquisition Success
Coca-Cola Acquisition of CCE North America: Implementation Analysis: Likelihood of Acquisition Success (2)
Coca-Cola Acquisition of CCE North America: Conclusion to M&A Deal Analysis
Coca-Cola CCE Merger: Table of Contents and Works Cited List
Coca-Cola M&A Activity: PepsiCo M&A Portfolio Analysis (Largest Competitor)
PepsiCo Chairman and CEO Indra Nooyi accurately recaps the changing industry dynamics which have resulted in the two major beverage company business model trends previously identified:
“Our operating environment has changed dramatically in the last decade. Retailers have continued to consolidate. New companies have emerged. And non-carbonated drinks, which have different economics and different distribution systems than carbonated soft drinks, have become a much bigger factor in the industry and in our own portfolio.”[ Platt, Gordon. "Pepsi Puts Some Fizz Back in M&A Market." Global Finance Magazine. June 2009. Web. 1 May 2011. http://www.gfmag.com/archives/100-june-2009/1833-regulars-finance-mergers-a-acquisitions.html#axzz1Kqmf5N9W .]
Exhibit 3 highlights significant M&A activity for PepsiCo between 1998 and 2010. The major industry trends, brand acquisition and vertical integration, are immediately apparent in this list. PepsiCo bought the Tropicana and Gatorade[ Chazan, Guy. "Pepsi to Buy Wimm-Bill-Dann of Russia for $5.8 Billion." The Wall Street Journal. 3 Dec. 2010. Web. 01 May 2011. http://online.wsj.com/article/SB10001424052748703377504575650252777195806.html .] brands to enhance the company’s variety of beverage offerings. On the other hand, PepsiCo’s acquisitions of Pepsi Bottling Group (PBG) and PepsiAmericas (PAS) were pursued strictly with operational efficiency in mind.
For many smaller players in the beverage industry, M&A means acquiring other small companies and achieving both gains in market share and streamlined operations. At the world’s largest beverage companies like Coca-Cola and PepsiCo, M&A activities tend to focus on one goal or the other. For example, PBG and PAS are in the business of bottling and distributing beverages only, with no actual brand ownership to their names. Conversely, PepsiCo’s acquisition of South Beach Beverage Company was designed to offer customers all across the country a healthy alternative-type beverage under the umbrella of Pepsi’s already highly efficient system of franchising with bottlers. In this way, the largest beverage companies of today are pursuing very focused M&A deals with narrow goals in mind.
Exhibit 4 presents abridged details of two PepsiCo M&A deals featured in Exhibit 3, Wimm-Bill-Dann (2010)[ Ibid. ] and Quaker Oats (2001).[ "Pepsi Buys Quaker in $13.4B Stock Deal." ABC News. 4 Dec. 2001. Web. 01 May 2011. http://abcnews.go.com/Business/story?id=88989 .] Of these acquisitions, Tom Pirko, CEO of beverage company consulting firm Bevmark, says “Pepsico is building a formidable package of leading brands.”[ Ibid. ] These are just a few of PepsiCo’s many M&A deals over the last decade, but they highlight the company’s participation in the beverage industry’s overall trends.
More posts from a paper on Coca-Cola M&A Activity (including merger with CCE):
Coca-Cola M&A Activity, CCE Acquisition: Executive Summary
Coca-Cola M&A Activity: Introduction
Coca-Cola M&A Activity: Product Trends
Coca-Cola M&A Activity: Demand and Economic Trends
Coca-Cola M&A Activity: Business Model Trends in the Beverage Industry
Coca-Cola M&A Activity: Beverage Industry Business Model Trends (2)
Coca-Cola M&A Activity: Company Strategic Objectives
Coca-Cola M&A Activity: Company Strategic Objectives (2)
Coca-Cola M&A Activity: Company Portfolio Analysis
Coca-Cola M&A Activity: Company Portfolio Analysis (2)
Coca-Cola M&A Activity: Company Portfolio Analysis (3)
Coca-Cola M&A Activity: PepsiCo M&A Portfolio Analysis (Largest Competitor)
Coca-Cola M&A Activity: PepsiCo M&A Portfolio Analysis (Largest Competitor) (2)
Coca-Cola M&A Activity: Other Beverage Industry M&A Activity
Coca-Cola Acquisition of CCE North America: Deal Structure
Coca-Cola Acquisition of CCE North America: Deal Structure (2)
Coca-Cola Acquisition of CCE North America: Major Legal and Financial Players
Coca-Cola Acquisition of CCE North America: Regulatory and Shareholder Approval of the Transaction
Coca-Cola Acquisition of CCE North America: Implementation Analysis: Likelihood of Acquisition Success
Coca-Cola Acquisition of CCE North America: Implementation Analysis: Likelihood of Acquisition Success (2)
Coca-Cola Acquisition of CCE North America: Conclusion to M&A Deal Analysis
Coca-Cola CCE Merger: Table of Contents and Works Cited List
“Our operating environment has changed dramatically in the last decade. Retailers have continued to consolidate. New companies have emerged. And non-carbonated drinks, which have different economics and different distribution systems than carbonated soft drinks, have become a much bigger factor in the industry and in our own portfolio.”[ Platt, Gordon. "Pepsi Puts Some Fizz Back in M&A Market." Global Finance Magazine. June 2009. Web. 1 May 2011. http://www.gfmag.com/archives/100-june-2009/1833-regulars-finance-mergers-a-acquisitions.html#axzz1Kqmf5N9W .]
Exhibit 3 highlights significant M&A activity for PepsiCo between 1998 and 2010. The major industry trends, brand acquisition and vertical integration, are immediately apparent in this list. PepsiCo bought the Tropicana and Gatorade[ Chazan, Guy. "Pepsi to Buy Wimm-Bill-Dann of Russia for $5.8 Billion." The Wall Street Journal. 3 Dec. 2010. Web. 01 May 2011. http://online.wsj.com/article/SB10001424052748703377504575650252777195806.html .] brands to enhance the company’s variety of beverage offerings. On the other hand, PepsiCo’s acquisitions of Pepsi Bottling Group (PBG) and PepsiAmericas (PAS) were pursued strictly with operational efficiency in mind.
For many smaller players in the beverage industry, M&A means acquiring other small companies and achieving both gains in market share and streamlined operations. At the world’s largest beverage companies like Coca-Cola and PepsiCo, M&A activities tend to focus on one goal or the other. For example, PBG and PAS are in the business of bottling and distributing beverages only, with no actual brand ownership to their names. Conversely, PepsiCo’s acquisition of South Beach Beverage Company was designed to offer customers all across the country a healthy alternative-type beverage under the umbrella of Pepsi’s already highly efficient system of franchising with bottlers. In this way, the largest beverage companies of today are pursuing very focused M&A deals with narrow goals in mind.
Exhibit 4 presents abridged details of two PepsiCo M&A deals featured in Exhibit 3, Wimm-Bill-Dann (2010)[ Ibid. ] and Quaker Oats (2001).[ "Pepsi Buys Quaker in $13.4B Stock Deal." ABC News. 4 Dec. 2001. Web. 01 May 2011. http://abcnews.go.com/Business/story?id=88989 .] Of these acquisitions, Tom Pirko, CEO of beverage company consulting firm Bevmark, says “Pepsico is building a formidable package of leading brands.”[ Ibid. ] These are just a few of PepsiCo’s many M&A deals over the last decade, but they highlight the company’s participation in the beverage industry’s overall trends.
More posts from a paper on Coca-Cola M&A Activity (including merger with CCE):
Coca-Cola M&A Activity, CCE Acquisition: Executive Summary
Coca-Cola M&A Activity: Introduction
Coca-Cola M&A Activity: Product Trends
Coca-Cola M&A Activity: Demand and Economic Trends
Coca-Cola M&A Activity: Business Model Trends in the Beverage Industry
Coca-Cola M&A Activity: Beverage Industry Business Model Trends (2)
Coca-Cola M&A Activity: Company Strategic Objectives
Coca-Cola M&A Activity: Company Strategic Objectives (2)
Coca-Cola M&A Activity: Company Portfolio Analysis
Coca-Cola M&A Activity: Company Portfolio Analysis (2)
Coca-Cola M&A Activity: Company Portfolio Analysis (3)
Coca-Cola M&A Activity: PepsiCo M&A Portfolio Analysis (Largest Competitor)
Coca-Cola M&A Activity: PepsiCo M&A Portfolio Analysis (Largest Competitor) (2)
Coca-Cola M&A Activity: Other Beverage Industry M&A Activity
Coca-Cola Acquisition of CCE North America: Deal Structure
Coca-Cola Acquisition of CCE North America: Deal Structure (2)
Coca-Cola Acquisition of CCE North America: Major Legal and Financial Players
Coca-Cola Acquisition of CCE North America: Regulatory and Shareholder Approval of the Transaction
Coca-Cola Acquisition of CCE North America: Implementation Analysis: Likelihood of Acquisition Success
Coca-Cola Acquisition of CCE North America: Implementation Analysis: Likelihood of Acquisition Success (2)
Coca-Cola Acquisition of CCE North America: Conclusion to M&A Deal Analysis
Coca-Cola CCE Merger: Table of Contents and Works Cited List
Subscribe to:
Posts (Atom)