Pepsi to fizz up business, nears $8-bn bottling deal

NEW YORK: PepsiCo, the world���s second-largest soda maker, is close to an agreement to buy Pepsi Bottling Group and PepsiAmericas for about $7.8 billion, said people familiar with the matter.

PepsiCo is offering $36.50 a share for Pepsi Bottling and $28.50 a share for PepsiAmericas, half in cash and half in stock, based on the July 31 closing price of PepsiCo, according to the people, who declined to be identified because the talks are private. PepsiCo originally offered about $6 billion in April for its two biggest bottlers, a bid they both rejected.

The takeovers would give Purchase, New York-based PepsiCo control of about 80% of its North American beverage market, enabling chief executive officer Indra Nooyi to cut hundreds of millions of dollars in annual costs and simplify negotiations with retailers such as Wal-Mart Stores.

The parties have sparred over how much the maker of Pepsi-Cola could expect to save. Pepsi Bottling said in June that the transactions could bring as much as $850 million in annual savings, compared with PepsiCo���s estimate of at least $200 million.

PepsiCo and bigger rival Coca-Cola sell beverage concentrate and syrup to licensed bottlers, which add water and other ingredients, put the mixture in bottles and cans, and sell it. In 1999, PepsiCo followed Coca-Cola���s lead by spinning off its capital-intensive bottling operations to create Somers, New York-based Pepsi Bottling.