PepsiCo To Acquire 66 % Of Russia’s Wimm-Bill-Dann Dairy And Juice Company For $3.8 Billion

PepsiCo, one of the world's largest food-and- beverage companies, and Wimm-Bill-Dann Foods OJSC, Russia's leading branded food-and-beverage company, announced that PepsiCo has agreed to acquire 66 % of Wimm-Bill-Dann for $3.8 billion, pending the required government approvals. In connection with this acquisition, PepsiCo will offer to acquire the remaining shares of Wimm-Bill-Dann through an offer following completion of that acquisition at such time and on terms as are mandated by Russian law, and PepsiCo may acquire additional shares in other transactions.

Wimm-Bill-Dann is a leader in both traditional and value-added dairy products, with a solid position in juice. 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 approximately $10 billion today to nearly $13 billion. This moves the company closer to its strategic goal of building a $30 billion nutrition business by 2020.

Terms of the Transaction

Under the acquisition agreement, PepsiCo will acquire 66 % 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 % to the 30-day average trading price of Wimm-Bill-Dann's ADR shares. The acquisition is subject to customary closing conditions, including receipt of certain regulatory approvals.

Financial Impact

PepsiCo indicated the transaction is expected to be modestly accretive to earnings in year one (excluding one-time transaction costs and fees). PepsiCo expects the combination to have the potential for total pre-tax annual run-rate synergies of approximately $100 million by 2014. The transaction will be funded through a combination of internal cash on hand and short-term debt financing, preserving balance sheet flexibility.

Key Attributes of the Combined Company

The completed transaction, which will be accretive to PepsiCo's top-line and bottom-line growth rates, excluding one-time transaction costs and fees, will bring together PepsiCo's large global food and beverage brands (Pepsi-Cola, Lipton and Lay's), its Russian juice and water brands (Fruktovi Sad, Ya, Tonus, Hrusteam and Aqua Minerale) and Wimm-Bill-Dann's portfolio of leading dairy and juice brands (Domik v Dorevne, Chudo, Imunele, J7, Lubimy Sad, 100 % Gold Premium and Agusha).