PepsiCo has agreed to sell certain juice assets across North America and Europe to private equity firm PAI Partners for $3.3 billion, as it looks to optimise its portfolio.
The agreement includes a controlling stake in Tropicana, Naked and other select juice brands across North America, as well as an irrevocable option to sell certain juice businesses in Europe.
Upon completion of the transaction, PepsiCo will retain a 39% non-controlling minority interest in a newly-formed joint venture managed by PAI Partners. The soft drinks giant will also retain exclusive US distribution rights for the brands for the small-format and foodservice channels.
PepsiCo says the sale will enable it to focus on growing its portfolio of healthier snacks, zero-calorie beverages and better-for-you products. Recently, the company vowed to cut sugar levels in beverages and to introduce more nutritious snacks in the EU by 2025.
“This joint venture with PAI enables us to realise significant upfront value, whilst providing the focus and resources necessary to drive additional long-term growth for these beloved brands,” said PepsiCo chairman and CEO, Ramon Laguarta.
He added: “In addition, it will free us to concentrate on our current portfolio of diverse offerings, including growing our portfolio of healthier snacks, zero-calorie beverages, and products like SodaStream which are focused on being better for people and the planet.”
PAI Partners will become the majority shareholder of the transferred juice business, which will join previous investments such as Addo Food Group and Winterbotham Darby, and Ecotone, formerly called Wessanen.
Frédéric Stévenin, a managing partner at PAI Partners, said: “We believe there is great growth potential to be realised through investments in product innovation, expansion into adjacent categories, and enhanced scale in branded juice drinks and other chilled categories.
“We are also thrilled that PepsiCo will remain involved as our partner in the joint venture as we execute our plans to drive the future success of these brands.”
PepsiCo revealed that the juice businesses reported approximately $3 billion in 2020 net revenue with operating profit margins that were below the company’s overall year operating margin.
PepsiCo plans to use the proceeds from the sale to strengthen its balance sheet and make organic investments in the business. The company recently reported a 20.5% increase in second quarter net revenue.
The deal – which is subject to customary conditions – is expected to close later this year or in early 2022.
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