PepsiCo cements hold of ex-Soviet drinks market

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PepsiCo agreed to buy one of Russia's top drinks companies Thursday in a deal that would make the US food giant a dominant force on the Russian market and extend its reach deep into former Soviet lands.

A PespiCo spokesman told AFP that the company would pay 5.4 billion dollars for the 100-percent stake in Wimm-Bill-Dann after deducting for the Russian producer's debts and treasury holdings.

PepsiCo said the deal would make it the largest food-and-beverage business in Russia -- nearly doubling the size of its nearest competitor -- and expand its presence in both Eastern Europe and Central Asia.

"This moves the company closer to its strategic goal of building a 30-billion-dollar nutrition business by 2020," PepsiCo said in a statement that predicted Russian revenues of five billion dollars next year.

PepsiCo chief executive Indra Nooyi called Russia "a fast-growing, strategically important market offering abundant opportunity."

Thursday's agreement gave the US company immediate control of a 66-percent stake for 3.8 billion dollars. The remaining shares will be obtained through a free-float.

News of the agreement sent WBD shares surging 21.5 percent on the Moscow exchange in mid-day trading.

Wimm-Bill-Dann is Russia's largest dairy and baby food producer and number three juice maker. It reports having 35 production facilities stretching from Ukraine to Central Asia and employing 18,000 workers.

Its J7 juice is the most popular brand in Russia -- giving PespiCo the access it had sought for years in former Soviet countries.

The acquisition is believed to be the largest in the US company's history and one of the most important ever concluded outside the Russian energy market.

Wimm-Bill-Dann reported revenues of 2.18 billion dollars in 2009. It said earnings were hurt that year by a ruble devaluation and predicted a stronger performance for 2010.

"This represents a tremendous vote of confidence in the future of the Russian market," said Wimm-Bill-Dann Board Chairman Sergei Plastinin.

"Integration into PepsiCo also provides our employees with access to a world-class corporate culture and almost unlimited career potential in one of the largest companies in the world."

© 2010 AFP

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