PepsiCo in Talks To Buy Russia's Top Juice Maker
PepsiCo, the world's number two soft drinks maker, is in talks to buy Russia's top juice maker Lebedyansky, which is being auctioned, people familiar with the matter said on Monday.
Russian business daily Kommersant said PepsiCo had agreed to buy over 76 percent of Lebedyansky for between $1.5 billion and $2 billion. The sources would not confirm terms.
The company's closing price on Friday put its market capitalization at $1.95 billion.
Spokesmen for Lebedyansky and PepsiCo both declined to comment.
Deutsche Bank is advising Lebedyansky while Dresdner Bank and Russia's Renaissance Capital are advising PepsiCo, the sources said. The banks declined to comment.
Kommersant said the deal would take place before the year end, sending Lebedyansky shares up 3.9 percent to 2,530 roubles ($99.21).
PepsiCo, like rival Coca-Cola , is focusing on emerging markets to help offset weakness at home, where people are choosing healthier drinks like bottled waters and teas over traditional soft drinks.
PepsiCo controls around a fifth of the Russian soft drinks market and around a third of potato chip sales, but currently controls just 2 percent of the Russian juice market through the Tropicana brand.
CocaCola controls over a fifth of the Russian juice sector after the $530 million purchase of producer Multon in 2005.
PepsiCo has no juice-producing assets in Russia, and Lebedyansky, which has over 30 percent of the juice market, is seen as an attractive target for the beverage giant.
Analysts said the deal could have become more likely after private equity group Lion Capital agreed to buy PepsiCo's previous target, Russia's number three fruit juice maker, Nidan Soki.
"We have long seen Lebedyansky, with its leading market position in juice and its best-in-class distribution system, as an attractive takeover target for international food and beverage companies," Alfa Bank said in a note.
About 23 percent of Lebedyansky shares are freely floated, while 76 percent are controlled by a group of Russian businessmen including former director Nikolay Bortsov and his son Yuri, the firm's chairman.