PepsiCo offers to buy Mpls bottler and one other, for $6B

Shares of Minneapolis-based PepsiAmericas jumped 26 percent today after PepsiCo, the maker of drinks like Mountain Dew and its namesake cola, announced it wants to acquire the company and Pepsi Bottling Group, another of its big bottlers.

PepsiAmericas, a low-profile Pepsi bottler, is one of Minnesota's 19 Fortune 500 companies. Robert Pohlad, the second son of the late Twin Cities banking czar and Minnesota Twins owner Carl Pohlad controls about 10 percent of the company's stock.

Regulatory filings indicate Robert Pohlad controls about ten percent of shares of PepsiAmericas, which has annual sales of nearly $5 billion. It operates in parts of Minnesota and 18 other states, as well as several countries in Europe and the Caribbean.

PepsiCo already has a large stake in PepsiAmericas, the second-biggest Pepsi bottler in the country, and is willing to pay about $6 billion in cash and stock for the two bottling companies.

"This deal will remake the landscape of the American beverage business," said John Sicher, editor of the trade publication Beverage Digest. "It is a very dramatic deal and will change a lot of things in terms of Pepsi having more flexibility and control on how its products get to market."

If it acquires the two bottling companies, PepsiCo would control the distribution of about 80 percent of its beverages.

Sicher says Pepsi would not have to negotiate with bottlers about what items are pushed for distribution, and could instead bargain directly with retailers.

"Today, there are many, many more products with many more varieties and sub-varieties of those products, and Pepsico wants more control and flexibility in terms of what products are sold in what stores and how those products get to those stores," he said.

PepsiAmericas employs more than 20,000 people and operates 33 manufacturing facilities and some 175 distribution centers. It's unclear how many people PepsiAmericas employs in Minnesota.

PepsiAmericas and Pohlad did not respond to requests for comment. But PepsiAmericas operations are somewhat limited in the state. Its markets do not include the Twin Cities.

That's the turn of Pepsi Bottling Group, the other bottler PepsiCo wants to own.

PepsiCo says its acquisition of its two biggest bottlers would lead to more than $200 million in annual savings and add to corporate earnings.

Sicher expects there will be job cuts. But he predicts the cuts would come primarily at the management level.

"I would think the reduction among the working ranks -- the people who make and sell and distribute the beverages will be relatively insignificant," he said. "I think there will be more changes perhaps in terms upper level management redundancy, and possibly some consolidation of facilities."

Early today, PepsiCo tried to sell Wall Street analysts on the proposed deal. PepsiCo Chief Executive Indra Nooyi told analysts the deal would position PepsiCo to respond faster and more forcefully to the market.

"We would be able to better serve both large and small format retailers and food service operators in the territories we own," she said. "We will provide one face to beverage customers in 80 percent of the country. And importantly it would facilitate our bring to market innovate new products with a greater range of nutritious offerings."

Editors Note: This story has been amended to correct a statement describing Robert Pohlad as PepsiAmericas' largest shareholder. PepsiCo is the largest shareholder.

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