Business & Investment

PepsiCo Selles Tropicana and Naked Juice Brands to Private Equity Farm for $ 3.3 Billion

PepsiCo Inc Update

PepsiCo has agreed to sell control of the Tropicana and Naked Juice brands to French private equity firm PAI Partners for $ 3.3 billion. This is a calorie-free beverage, energy drink, and as SodaStream.

PAI, which owns the Haagen-Dazs brand in the United States and a Movenpick ice cream brand in a joint venture with Nestlé, will purchase a 61% stake in the new company that holds the brand rights for juice. PepsiCo owns the remaining 39 percent.

Hugh Johnston, vice chairman and chief financial officer of PepsiCo, told the Financial Times that the company “is aiming to steer its portfolio towards higher growth.”

“Some of the higher growth is in the healthier category,” comes from lighter snacks, zero-calorie drinks, sodastream products, and energy drinks.

“Juice, on the other hand, was a much slower growth category,” he added. The rate of return is below PepsiCo’s average.

“We look at the Tropicana business,” it might be better to be run by someone else, such as a private equity firm that focuses on low-margin, low-growth types of businesses. “.

According to Johnston, PepsiCo has decided to retain its minority shareholder as PAI has a track record of partnering with Nestlé in the ice cream group Fronelli to partner with the consumer goods business.

Tropicana and naked juice were “both the right and the wrong” of the transition to healthier products, PAI’s managing partner Frederick Stevenin told FT.

“The juice category has been slowing down in the last few years because it contains sugar,” he said. “Juice contains a lot of natural sugar, but it can also be good for vitamins and fiber.”

However, sales increased during the pandemic as consumers were eating breakfast at home and trying to strengthen their immune system with products high in vitamin C, he added.

This could give the brand “momentum,” Stevenin said, and PepsiCo’s Johnston said it was a “great opportunity to trade.”

Cut out of PepsiCo, the new juice company will have a corporate value of $ 4.5 billion, of which about $ 2.2 billion will be equity and $ 2.3 billion in debt. PAI’s stake will be approximately $ 1.3 billion and PepsiCo’s stake will be approximately $ 850 million.

According to PepsiCo, the juice brand had net sales of about $ 3 billion in 2020.

PepsiCo added that the proceeds of the sale will be used to “strengthen the balance sheet.”

The transition to a healthier portfolio was initiated by PepsiCo’s former CEO Indranouy and continued by his successor, Ramon Laguarta.

Large consumer brands such as PepsiCo and its rival Coca-Cola are trying to reduce higher sugar products as younger consumers increasingly choose healthier or lower calorie alternatives. ..

PepsiCo has a sodastream that makes a device to carbonate water $ 3.2 billion transaction In 2018.

US consumer groups are also expanding their energy drink portfolio. Last year, PepsiCo acquired Rockstar Energy Beverage for $ 3.85 billion, adding fast-growing brands to existing stable energy drinks such as Mountain Dew Kickstart, Game Fuel and AMP.

PAI, which manages around € 15 billion in private equity funds, will use a seventh fund of € 5.1 billion to purchase the PepsiCo brand.

This article was revised after publication to clarify that PIA owns the Haagen-Dazs brand in the United States.

PepsiCo Selles Tropicana and Naked Juice Brands to Private Equity Farm for $ 3.3 Billion

https://www.ft.com/content/859b3fc6-0942-48a9-8a7d-a0ca0ff4cc70 PepsiCo Selles Tropicana and Naked Juice Brands to Private Equity Farm for $ 3.3 Billion

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