PEPSICO said yesterday it will buy a majority stake in Russian juice and dairy company Wimm-Bill-Dann (WBD) for an initial deal price of $3.8bn (£2.43bn) in its most ambitious overseas purchase to date.
The deal will make PepsiCo Russia’s largest food and drink maker. PepsiCo plans to buy 66 per cent of the firm.
However, the US company said it will also offer to buy the remaining shares of WBD after the initial deal closes, including $1bn in debt. Pepsi values the entire Russian company at $5.4bn.
Pepsi’s price of $33 per American depositary receipt for WBD represents a 32 per cent premium to the firm’s 30-day average trading price.
Hugh Johnston, PepsiCo’s chief financial officer, said he expected to clear any regulatory hurdles and to close the deal by the second quarter.
The acquisition will make Russia PepsiCo’s top overseas market replacing Mexico.
It sees the company follow large consumer products makers such as Kraft Foods and Procter & Gamble, which are investing billions in cultivating emerging markets like Brazil, Russia, India and China (Bric) as growth at home slows.
US acquisitions in the emerging markets this year have increased by a staggering amount.
They currently total $23.8bn – an increase of 94 per cent on last year and the biggest US emerging market activity since 2007.
Worldwide cross-border mergers and acquisitions (M&A) total $843.2bn this year, up 54 per cent year-on-year, while cross-border M&A accounts for 39 per cent of worldwide deal activity this year, compared to 27 per cent last year, according to data from Thomson Reuters.