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PepsiCo makes big Russian deal

Analysis

PepsiCo, world leader on the juice market, does not even rank in the top ten producers in Russia. That is to change before the end of the year, however reports Kommersant. 

PepsiCo has reached an agreement for the purchase of more than 70% of the stock in Russia’s largest juice producer Lebedyansky. The value of that transaction may be $1.5-2 billion, making it the largest deal ever on the Russian juice market as well as on the whole Russian foodstuffs market. The previous record was set, when Coca Cola bought Multon for $530 million.

Several sources in the financial world report that the deal may be completed in September or October. PepsiCo is being consulted by Deutsche Bank and will buy 76.13% of the company stock for over $1.5 billion. The remaining 23.87% is traded on the MICEX and RTS exchanges. A Lebedyansky executive confirmed the information, although the Lebedyansky press service and PepsiCo vice president for public relations at the Russian division Alexander Shalnev declined to comment on the “market rumors.”

The Children’s Basketball League, of which Lebedyansky is the exclusive sponsor, also knows about the impending deal. “Our five-year sponsorship contract expired last month and we wanted to extend it,” a league manager said, “but at Lebedyansky they said that everybody had their bags packed and is waiting for the new management from PepsiCo to arrive.” Commercial director of the National Basketball League Andrey Shirokov told Kommersant in Friday that the sponsorship contract was extended whether the new owner of the company had approved it. A spokesman for the Lebedyansky personnel department confirmed that all vacations have been postponed there, but declined to explain the reason. Lebedyansky distributors also say they have observed preparations for the sale.

The main shareholders in Lebedyansky are its former director State Duma member Nikolay Bortsov (30%), his son and Lebedyansky board chairman Yury Bortsov (25.1%) and board members Olga Belyatseva (18.4%) and Dmitry Fadeev (2%). The remainder of the shares is traded on the Russian stock market. The company’s capitalization as of August 10 was $1.94 billion. Information about talks between Lebedyansky and PepsiCo first emerged on the market last November. Lebedyansky stock has gained almost 18% in the last two month and now sells for around $95 per share. (kommersant.com)

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