PepsiCo's Russia deal wins Putin's blessing

28th December 2010, Comments 0 comments

PepsiCo's big venture into Russia received a major boost Tuesday when Prime Minister Vladimir Putin gave his blessing to the US giant's takeover of a major local juice and dairy firm.

PepsiCo's intended purchase of Wimm-Bill-Dann is its biggest acquisition outside the United States and one of the most important deals ever struck outside the Russian energy sector.

The takeover earned a nod of approval from the head of Russia's anti-monopoly service Monday and still further support from the country's de facto leader Putin one day later.

"This deal's implementation will not only help our partners establish themselves on the Russian food market, but enter the markets of the Commonwealth of Independent States," ITAR-TASS quoted Putin as saying.

He added that PespiCo -- which was the first US consumer goods company to break into the Soviet market in 1973 -- had promised to invest about one billion dollars (30 billion rubles) in the Russian company over the next five years.

"This will help create more than one thousand new jobs," said Russia's former president turned premier.

The acquisition appeared to be headed toward formal approval next month.

Russia has sought to attract new foreign investments as it tries to recover from a 2009 financial meltdown that derailed a modernisation drive intended to wean the country off its dependence on energy revenues.

Putin's formal approval is seen as imperative before any company can break into a market as lucrative and important to Russia as the food and drinks sector.

Putin noted that Wimm-Bill-Damm was recently named by Forbes magazine as one of the country's 10 most famous brands and listed several of its more popular products.

"This is one of our leading players on the soft drink market," Putin said.

News reports said the deal was also approved Tuesday by a cabinet commission in charge of foreign investments.

The head of Russia's anti-monopoly unit said in separate remarks that all formalities should be completed within a matter of weeks.

"We are well disposed toward this deal," Igor Artemyev said in comments that mirrored those he issued Monday.

"I think that we will conclude this by January," Interfax quoted the anti-monopoly chief as saying.

PepsiCo on December 2 said that it had agreed to pay 5.4 billion dollars (4.1 billion euros) for Russia's largest dairy and baby food producer.

The takeover would enable PepsiCo to become not only the country's largest food-and-beverage business but also expand further into eastern Europe and the former Soviet states.

Wimm-Bill-Dann -- named in honour of its founder's love for tennis -- controls just over 40 percent of Russia's juice market and 30 percent of the dairy market.

The announced agreement envisions PepsiCo taking immediate control of a 66-percent stake in Wimm-Bill-Dann for 3.8 billion dollars.

The remaining shares are to be bought progressively in an acquisition that PepsiCo hopes will enable it to establish a 30-billion-dollar nutrition business by 2020.

© 2010 AFP

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